Fewer layoffs, steady hiring: the US jobs market is still holding up 

Higher interest rates are making mortgages more expensive, businesses are watching costs carefully and inflation is still refusing to disappear. Normally, that would sound like a difficult combination for workers. 

Yet the latest figures from the United States tell a surprisingly steady story. 

New applications for unemployment benefits fell to 196,000 in the latest week, the lowest level since mid-July. The four-week average, which smooths out some of the noise in weekly data, also declined. 

In simple terms: companies may be cautious about hiring, but they still appear reluctant to let people go. 

A “slow-hire, slow-fire” jobs market 

That phrase increasingly describes the unusual position of the American labour market. 

Businesses are no longer competing for workers with the intensity seen after the pandemic. Recruitment has become more selective, candidates can spend longer searching for a role and many employers are thinking carefully before adding another person to payroll. 

But the other half of the equation matters just as much. Layoffs remain relatively low. 

Unemployment stood at 4.1% in August, while job creation was stronger than economists had expected. That combination suggests a market that is neither racing ahead nor falling apart. 

It is simply becoming more cautious. 

Why are companies holding on to their workers? 

One possible explanation is that businesses remember how difficult recruitment became only a few years ago. 

When experienced employees leave, replacing them can mean recruitment costs, training, lost productivity and months of rebuilding knowledge inside a team. If demand is still reasonably healthy, keeping existing staff can make more sense than cutting quickly and hiring again later. 

There are also some structural reasons why employers may be reluctant to reduce headcount too aggressively: 

• skilled workers can still be difficult to replace in many industries,
• business activity remains relatively resilient,
• companies have become more selective about new hiring rather than relying on large redundancy programmes. 

That creates a labour market where people already in work may feel relatively secure, while those trying to move jobs can find the process more competitive. 

The Federal Reserve has just made borrowing more expensive 

The resilience becomes even more striking when interest rates are added to the picture. 

The Federal Reserve raised its benchmark rate by 0.25 percentage points this week, taking the target range to 3.75%–4.00%. It was the first increase in more than three years. 

The central bank is still trying to bring inflation under control. Higher rates make borrowing more expensive for households and businesses, which would normally be expected to cool spending, investment and eventually hiring. 

So far, however, the labour market has absorbed that pressure better than might have been expected. 

Good news, but not a hiring boom 

There is an important distinction between few layoffs and easy job hunting. 

A low level of unemployment claims tells us that relatively few people are suddenly losing their jobs. It does not mean employers are opening vacancies at the same pace as during the post-pandemic hiring surge. 

For jobseekers, the current market may therefore feel slower than the headline numbers suggest. Employers have more candidates to choose from and can afford to take longer over recruitment. 

For the wider economy, though, low layoffs remain an encouraging signal. Workers who keep their jobs continue spending, paying mortgages and supporting demand, which helps prevent a slowdown from turning into something much more serious. 

Sometimes stability is the good news 

Strong labour markets do not always need record vacancy numbers or spectacular wage growth. 

Sometimes the positive story is simply that, despite expensive credit, persistent inflation and plenty of uncertainty, most businesses are still choosing to keep their people. 

Right now, that quiet stability may be one of the most important strengths of the American economy.