The number of Americans filing new applications for jobless benefits unexpectedly fell last week, suggesting employers may be holding on to workers despite other indications of a cooling labor market.

Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 227,000 for the week ended July 4, the Labor Department said Thursday.

Economists polled by Reuters had forecast 235,000 claims for the latest week. The data included last week's July Fourth holiday and claims tend to be volatile around public holidays.

Economists and U.S. central bankers have generally viewed the labor market as solid, if weakening somewhat. This is a view reinforced by last week's monthly jobs report that showed the unemployment rate ticking down to 4.1%, though largely because the workforce shrank, and a bigger-than-expected gain of 147,000 jobs, though highly concentrated in just a few sectors.

Fed Chair Jerome Powell has noted that in the current low-hiring and low-firing environment, any increase in layoffs could rapidly push up the unemployment rate. So far that has not happened, though nearly 100 U.S. companies have announced layoffs this month, including Microsoft and Intel. Economists say President Donald Trump's still unsettled tariff policy is making it difficult for businesses to plan ahead.

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Hiring has been lackluster, making it harder for people out of work to find jobs. Last month's jobs report showed the median duration of unemployment rose in June to 10.1 weeks from 9.5 weeks in May. The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 10,000 to a seasonally adjusted 1.965 million during the week ending June 28, Thursday's claims report showed.

The so-called continuing claims are at their highest level since November 2021, suggesting those who lose a job are taking longer to find a new position.

The Federal Reserve last week left its policy rate in the 4.25%-4.50% range where it has been since December as central bankers wait to see if tariffs push up inflation before moving to lower rates.