US Job Market Weakens as Layoffs Surge and Hiring Slows in August
Unemployment claims rise above expectations, with job cuts hitting key sectors amid economic uncertainty and policy impacts.
The number of Americans filing new unemployment claims rose more than expected last week, while private sector hiring slowed in August, according to Reuters.
Government data released Wednesday showed that the number of unemployed Americans exceeded available job openings in July for the first time since the COVID-19 pandemic.
Economists attribute the slowdown in job growth to broad tariffs imposed by former President Donald Trump on imports, along with immigration restrictions that are limiting hiring in construction and restaurant sectors.
The weaker labor market may prompt the Federal Reserve to resume interest rate cuts later this month, although much depends on the August jobs report scheduled for release on Friday.
Layoffs
According to The Hill, layoffs rose by nearly 40% in August, with employers cutting 85,979 jobs – the largest August layoffs since the COVID-19 peak in 2020, according to an analysis released Thursday.
Analysis by consulting firm Challenger, Gray & Christmas suggested that the job cuts are likely linked to some of President Trump’s policies since his return to office in January.
So far, employers have implemented 892,362 job cuts in 2025 – the highest number since 2020, when 1,963,458 layoffs were announced from January to August during the pandemic, according to the company’s analysis.
Experts noted that the White House’s Government Efficiency Program and its broad federal workforce reductions likely had a cascading effect leading to layoffs.
According to the analysis, “actions under the Government Efficiency Program” were the primary driver of job reductions and layoffs so far in 2025.
Biggest Losses
Andrew Challenger, a labor expert and Senior Vice President at the company, said: “After the impact of the DOGE Act on the federal government, employers are pointing to economic and market factors as reasons for layoffs.” He added, “We have also seen a sharp rise in layoffs due to business closures, store shutdowns, and bankruptcies this year compared to last year.”
The pharmaceutical sector, which saw 19,111 layoffs, and the financial sector, which experienced 18,092 cuts, suffered the largest losses in August.
Challenger noted that economic uncertainty and market volatility increased pressure on companies in the financial sector to reduce expenses.
Analysts found that the retail sector has been severely affected this year. Retailers eliminated 83,656 jobs by August, up 242% from the 24,489 jobs announced during the same period last year.
Trump Policies
Challenger highlighted the role of Trump-era tariff policies in job reductions, with continued effects likely throughout the rest of the year.
“Retailers are heavily affected by tariffs, inflation, and ongoing economic uncertainty, causing bankruptcies and closures,” he said.
He added, “If tariffs and consumer spending constraints persist, the upcoming holiday shopping season may see a decline in seasonal hiring, or even significant layoffs.”
Challenger also noted that seasonal hiring typically increases in September each year. “After the lowest recorded level of hiring plans in August, this could be a concerning indicator,” he added.
