The number of Americans filing new claims for unemployment benefits fell last week, pointing to continued stability in the labor market even as hiring slowed sharply in September.

Initial claims for state unemployment benefits declined by 2,000 to a seasonally adjusted 197,000 for the week ended October 3, the Labor Department said Thursday.

Economists polled by Reuters had expected 200,000 claims.

Claims have remained near 57-year lows for four consecutive weeks, reinforcing the picture of a “low-hire, low-fire” labor market in which companies are reluctant to add workers but are also avoiding widespread layoffs.

The latest data follows a weak September jobs report.

US employers added just 29,000 nonfarm jobs last month, well below the 84,000 increase expected in a Dow Jones consensus.

Payroll growth in previous months was also revised lower.

July’s increase of 21,000 was revised to a decline of 10,000, while August job growth was cut to 133,000 from 162,000.

Together, the revisions reduced payroll gains for those two months by 60,000.

Employers remain reluctant to hire

Economists have pointed to tepid hiring and a shrinking labor pool, partly due to retirements and tighter immigration, as factors restraining job growth.

At the same time, companies have continued to limit layoffs.

Challenger, Gray & Christmas said planned job cuts by US-based employers fell 18% to 43,281 in September, while announced layoffs were down 20% from a year earlier.

Employers have announced 573,195 layoffs during the first nine months of the year, 39% below the same period in 2025.

Planned cuts also fell 43% in the third quarter.

Hiring intentions improved in September, with companies planning 90,787 hires compared with just 12,325 in August.

However, that figure remained 23% below a year earlier.

Companies have largely been holding onto workers amid strong profit growth and resilient stock markets, but uncertainty surrounding tariffs and the US-Israeli war with Iran has discouraged more aggressive hiring.

Fed faces a difficult labor market

Minutes from the Federal Reserve’s September 15-16 meeting showed officials “judged that labor market conditions were stable and generally viewed the labor ‌market ⁠as close to maximum employment.”

Policymakers also “generally viewed the upside and downside risks to the labor market as broadly balanced.”

The Fed raised its benchmark interest rate by 25 basis points last month to a range of 3.75%-4.00%, its first hike in three years.

However, weaker-than-expected September payroll growth and cooler inflation readings have reduced expectations for another increase this month.

Economists expect the next hike in December.

Longer unemployment raises concerns

The claims report also showed continued claims, which track people receiving unemployment benefits beyond their first week, rose by 17,000 to 1.716 million for the week ended September 26.

While the level remains relatively low, the increase suggests that finding a new job may be becoming more difficult for some unemployed Americans.

“The labor market is stable, but it’s not picking up. It’s soft,” said Claudia Sahm, a former Federal Reserve analyst and chief economist at New Century Advisors, according to an earlier The New York Times report.

“The labor market is OK, it’s just who you are in the labor market that matters, and more than usual.”

The median duration of unemployment reached 11.5 weeks in September, close to a 4-1/2-year high.

That leaves the labor market in an unusual position: layoffs remain historically subdued, but companies are also hiring cautiously.

The combination has so far prevented a sharp deterioration in employment, while making the pace of future job creation increasingly uncertain.

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