The number of people asking for unemployment benefits fell sharply last week.

The Labor Department said on Thursday that jobless claims dropped to 196,000.

This is the lowest level since mid-July.

It is also down from 206,000 the week before.

The four-week average fell to 203,250.

This average smooths out weekly ups and downs.

Economists had expected 207,500 claims, according to a survey by the data firm FactSet.

Jobless claims are a sign of layoffs.

Economists watch them to see where the job market is going.

For the past year, claims have mostly stayed in a low range of 200,000 to 230,000 a week.

The American job market has stayed strong despite higher gasoline prices.

Those prices have hurt businesses and consumers since the fighting with Iran began on Feb. 28.

Layoffs are low because businesses remember the labor shortages after pandemic lockdowns.

They do not want to lose staff, and they are hiring, though only a little by recent standards.

So far this year, employers have added an average of 80,000 jobs a month.

This includes a surprising 162,000 in August.

That is better than a poor 2025, when monthly job creation averaged 9,700.

High interest rates and President Donald Trump's ever-changing trade policies discouraged hiring that year.

Even so, the current pace is well below the 166,000 monthly jobs created on average in 2023 and 2024.

It is also far below the 491,000 a month recorded during the 2021-2022 hiring boom.

That boom followed COVID-19 lockdowns.