By Reuters

(Reuters) - The number of Americans filing new applications for unemployment benefits unexpectedly fell last week, but that likely does not signal a material ​shift in the labor market, which remains in a holding ‌pattern.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 198,000 for the week ended January 10, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims for the latest week.

The surprise drop in claims ‌likely reflected continuing challenges adjusting the data for seasonal ​fluctuations around the year-end holiday season and the start of the year. There has been little change in labor market dynamics, with layoffs remaining ‍low and hiring sluggish.

Economists say President Donald Trump's aggressive trade and immigration policies have reduced both demand for and supply of workers. Businesses are also unsure of their ⁠staffing needs as they invest heavily in artificial intelligence, curbing hiring.

The ‍Federal Reserve's Beige Book report on Wednesday said "employment was mostly unchanged" in early January. ‌The ‌U.S. central bank said multiple districts "reported an increase in the usage of temporary workers, with one contact reporting this allows them 'to stay flexible in uncertain times'." When firms were hiring, it was "mostly to backfill vacancies rather ⁠than create new ⁠positions," the Fed ​added.

The government reported last week that nonfarm payrolls increased by 50,000 jobs in December. The economy added 584,000 jobs in 2025, the fewest in five years, averaging ‍about 49,000 positions per month. The unemployment rate fell to 4.4% from 4.5% in November. But long-term unemployment remains prevalent.

The number of people receiving unemployment benefits after an ​initial week of aid, a proxy for ‍hiring, decreased 19,000 to a seasonally adjusted 1.884 million during the week ended January 3, the claims ​report showed.

Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

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