The latest US labor market data released on Thursday included both the Department of Labour's Initial Jobless Claims report and the Challenger, Gray & Christmas Job Cuts report. Initial Jobless Claims for the week ending February 28 came in at 213K, lower than the expected 215K and unchanged from the previous week's revised figure of 213K, indicating continued stability in new unemployment applications [1]. The 4-week moving average also decreased by 4,750 to 215.75K from the prior revised reading of 220.5K, suggesting a modest improvement in short-term labor market trends [1]. However, Continuing Jobless Claims rose by 46K to 1.868M for the week ending February 21, pointing to a slight uptick in ongoing unemployment [1].
Meanwhile, the Challenger report showed a sharp decline in announced job cuts, with US-based employers reporting 48.307K layoffs in February—a 55% drop from January's 108.435K and a 72% decrease compared to February last year [2]. The cumulative layoffs for January and February totaled 156.742K, marking the lowest early-year figure since 2022, though still among the highest since the 2009 financial crisis [2]. Despite the improvement, Andy Challenger, Chief Revenue Officer at Challenger, Gray & Christmas, cautioned that rising economic and geopolitical uncertainty, particularly related to the conflict involving Iran, could prompt companies to tighten spending and announce more layoffs later in the quarter [2]. Store or unit closures, market and economic conditions, corporate restructuring, and Artificial Intelligence (AI) were cited as reasons for job cuts, with AI accounting for 4.680K layoffs in February [2].
On the hiring front, employers have announced plans to hire only 18.061K workers so far this year, a 56% decline compared to the same period in 2025, reflecting a cautious approach amid uncertain economic prospects [2].
Market reactions to the reports were muted. The US Dollar Index (DXY) traded near 99.10, up 0.33% on the day following the Jobless Claims report [1], while after the Challenger report, DXY was around 98.90, up 0.10% on the day [2]. The US Dollar was strongest against the Australian Dollar, gaining 0.72%, and also posted gains against other major currencies [1].
According to the Challenger report, a low reading in job cuts is typically seen as positive for the US Dollar, while a high reading is negative [2]. However, despite the positive job cuts data, hiring plans remain subdued, and ongoing economic uncertainty could impact future labor market conditions [2].
CONCLUSION
US labor market data showed stability in initial jobless claims and a sharp drop in announced layoffs, supporting a mildly positive sentiment for the US Dollar. However, weak hiring intentions and rising economic uncertainty suggest caution among employers. Market reaction was limited, with the US Dollar posting modest gains against major currencies.