According to the Labor Department, the number of initial jobless claims fell by 21,000 to 221,000 for the week ending March 1, well below analysts’ expectations of 236,000 new claims. Weekly jobless claims are seen as an indicator of layoffs, which have largely remained between 200,000 and 250,000 for several years.
The four-week moving average, which smooths out weekly fluctuations, increased by 250 to reach 224,250.
Analysts expect that the upcoming layoffs ordered by the Department of Government Efficiency may start to show up in future reports.
Earlier this week, two sources familiar with the situation told The Associated Press that the IRS is planning to cut its 90,000-person workforce by up to 50% through layoffs, attrition, and incentivized buyouts. These sources requested anonymity as they were not authorized to reveal the details.
The layoffs are part of the Trump administration’s broader efforts to reduce the size of the federal workforce, driven by the Department of Government Efficiency, overseen by billionaire Elon Musk.
In related news, around 7,000 probationary IRS employees, with less than a year of service, were laid off in February.
A memo from senior U.S. officials last week set the government downsizing process into motion, expanding President Trump’s efforts to shrink the workforce. Thousands of probationary employees have already been dismissed, and now attention is turning toward career employees with civil service protection. Government agencies have been instructed to submit their reduction plans by March 13, which could involve not only layoffs but also eliminating positions entirely.
Despite some signs of weakness over the past year, the labor market remains robust with abundant job opportunities and relatively low layoffs.
In January, the Labor Department reported that U.S. employers added 143,000 jobs, a significant slowdown from December’s 256,000 gains. However, the unemployment rate dropped to 4%, signaling continued strength in the labor market.
While layoffs remain low historically, some major companies have already announced job cuts this year, including Workday, Dow, CNN, Starbucks, Southwest Airlines, and Meta.
For the week ending February 22, the total number of Americans receiving unemployment benefits increased by 42,000, reaching 1.9 million.