US jobless claims climb amid storms, but labour market holds steady

• Continuing claims increased by 25,000 to 1.844 million, suggesting unemployed workers are taking longer to find jobs as labor demand eases
• January layoff announcements more than doubled year-over-year to 108,435 (highest since 2009), while hiring plans fell to just 5,306 (lowest January since tracking began in 2009)
• The Federal Reserve held rates steady at 3.50%-3.75%, with analysts expecting a cautious approach as policymakers balance slowing job growth against economic uncertainties and trade policy concerns

Summary

Key Data:

US initial jobless claims rose by 22,000 to 231,000 (seasonally adjusted) for the week ended January 31, exceeding economist expectations of 212,000. The four-week moving average increased by 6,000 to 212,250, while continuing claims rose 25,000 to 1.844 million for the week ended January 24.

Main Drivers:

The spike in claims is attributed primarily to severe winter weather disruptions across the US in late January, causing temporary layoffs and hiring delays. Seasonal adjustments and turn-of-year volatility also contributed to data fluctuations.

Labor Market Conditions:

Despite the increase, analysts characterize the market as operating in a "low hire, low fire" environment, showing gradual cooling rather than sharp weakening. However, Challenger, Gray & Christmas reported January layoffs surged to 108,435—the highest since 2009—more than double year-ago levels. Hiring plans dropped to 5,306, the lowest January figure on record since tracking began in 2009.

Corporate Factors:

Major companies including UPS and Amazon have announced recent layoffs. Uncertainty around trade policy, import tariffs, and rapid AI adoption are making businesses more cautious about workforce expansion, with resources being redirected toward automation and digital investments.

Market Implications:

The official January employment report, delayed by a federal government shutdown, is due next Wednesday. Economists forecast 70,000 nonfarm payroll additions (up from December's 50,000) with unemployment steady at 4.4%. The Federal Reserve held rates at 3.50%-3.75% last week and is expected to maintain its cautious stance through the first half of 2026, balancing slowing job growth against economic uncertainties.