US initial jobless claims slightly increase to 206,000, "low hiring, low firing" remains in the labor market

According to Jinse Finance APP, data released by the U.S. Department of Labor on Thursday shows that, for the week ending August 29, seasonally adjusted initial jobless claims were 206,000, an increase of 2,000 from the previous week's revised value, slightly higher than economists' expectations of 205,000. Although this data marks a new high since the week of August 15, initial claims this year have continued to hover near the lower end of the 189,000 to 230,000 range, consistent with economists' descriptions of a “sluggish hiring, slow firing” labor market.

At the same time, for the week ending August 22, continuing jobless claims (an indicator of hiring willingness) increased by 8,000 to 1.779 million, lower than the market forecast of 1.795 million. The modest rise in continuing claims indicates that the period for the unemployed to find new jobs has lengthened, but the overall level remains historically low.

The “slow hiring, low firing” pattern in the U.S. job market remains unchanged

An independent report from Challenger, Gray & Christmas shows that in August, U.S. companies announced 52,881 layoffs, a 58% increase from the previous month, but a 38% decrease year-on-year, marking the lowest August level since 2022. The total number of layoffs announced in the first eight months of this year was 529,914, a 41% decrease compared to the same period in 2025.

However, hiring has not kept pace. Although companies announced a 37% year-on-year increase in hiring plans in the first eight months, Challenger noted “these positions do not seem to be filled quickly.” The Federal Reserve's Beige Book report released on Wednesday confirms this view: employment increased “slightly” in August, with manufacturing, construction, and some service industries showing the strongest labor demand, while demand in retail and hospitality declined.

The report shows that nationwide employment presented “very slight” growth. Among the 12 Federal Reserve districts, three reported moderate employment increases, four reported slight increases, and five reported no change. The data collection for the report ended on August 24. The Beige Book also pointed out that U.S. economic growth is increasingly relying on a few projects such as AI data centers, while inflationary pressures remain persistent.

Non-farm data becomes the “key variable” for rate hikes, market highly focused on Friday’s report

Federal Reserve Chairman Kevin Walsh made it clear at the Jackson Hole global central banks' annual meeting last week that if policymakers fail to gain enough confidence that inflation is trending towards the 2% target, the Fed will “still have a lot of work to do.” The CME FedWatch tool shows that the probability of a 25bps rate hike in September has surged from about 34% before Walsh’s speech to more than 60%.

The August non-farm payroll report, to be released on Friday, will become the key variable for the interest rate decision. Market attention has shifted to the August non-farm payrolls report being published on Friday. Surveys indicate that economists expect about 56,000 new non-farm jobs in August, with the unemployment rate holding steady at 4.1%. Non-farm employment unexpectedly fell by 23,000 in July, and the downward revision for May and June totaled 103,000, showing a clearly cooling labor market.

ADP data further reinforces the view of a mild employment recovery. In August, the private sector added only 38,000 jobs, lower than the expected 48,000, marking the lowest growth rate since January this year. Of these, education and healthcare added 45,000 jobs, but manufacturing lost 17,000, and professional and business services decreased by 16,000.

Bank of America analysts pointed out that the non-farm data is “unlikely to be the decisive factor” in whether to raise rates in September, but a clearly weak report could reduce the chances of a rate hike.

Analysts expect the rebound in August non-farm employment to be partly reflected in the recovery of payrolls in local government education departments, but given that the temporary protected status for hundreds of thousands of Haitians is set to expire soon, affecting their work permits, a second consecutive monthly decline in employment cannot be ruled out. In the absence of a clear deterioration in the labor market, economists expect the Fed to take action to raise rates as early as this month to address persistent inflation pressures triggered by import tariffs and the Iran war.