US Unemployment Claims Drop Ahead of Annual Payroll Revisions

The number of Americans filing claims for unemployment benefits dropped last week, ahead of the highly anticipated annual payroll revisions.

Initial jobless claims fell by 4,000 to 203,000 for the week ending Aug. 22, according to Department of Labor Data released on Aug. 27.

Markets had forecast a reading of 208,000.

The four-week average, which strips out week-to-week volatility, ticked up above 205,000.

Weekly claims have been stuck in the historically low range of 189,000 to 203,000 throughout 2026. Any spikes logged this year were driven by short-term factors, such as the severe winter storm and school staff applying for unemployment benefits for summer vacation.

These low levels reflect the lack of layoffs across the U.S. labor market, supporting the oft-described “low fire, low hire” employment climate.

While springtime hiring momentum has slowed this summer, various indicators suggest labor demand could be picking up steam heading into the fall.

Private employers added an average of 11,750 jobs per week in the four weeks ending Aug. 8, according to payroll processor ADP. This marked the second consecutive weekly acceleration in hiring.

Small businesses have also said they plan to bolster their headcount in the coming months, with hiring plans at their highest level since October 2022, the National Federation of Independent Business reported this month.

Job postings on Indeed have also been steadily edging higher in August.

“Overall hiring demand has stayed steady in August, with postings on Indeed increasing marginally over the month and the overall level of job postings bumping along near their pre-pandemic baseline,” Indeed Hiring Lab economists said in an Aug. 24 note.

Continuing jobless claims—a measure of the number of individuals currently receiving unemployment benefits—fell to a lower-than-expected 1.778 million, from a downwardly revised 1.796 million.

Economists use recurring claims as a proxy for the difficulty that out-of-work individuals may have in finding new employment opportunities. It could also reflect that Americans are exhausting their benefits, since many states cap eligibility at 26 weeks.

Next week will bring a fresh tranche of employment data, with the August jobs report being the main event on Sept. 4.

Early estimates from Trading Economics suggest the U.S. economy added 12,000 jobs, a slight improvement over July’s loss of 23,000 jobs.

Annual payroll revisions will also examine whether the labor market was weaker than initially reported or better than expected.

Previewing Job Revisions

The Bureau of Labor Statistics will publish the preliminary annual revision for nonfarm payrolls on Aug. 28 at 10 a.m. ET, covering the 12 months through March 2026.

The advanced assessment of previously reported job growth refines the data using unemployment insurance tax records. The numbers provide economic observers with a more complete picture of the health of the U.S. labor market over the past year.

It has garnered significant attention in recent years for its sizable downward adjustments.

Last year’s preliminary benchmark revision showed payrolls were overstated by 898,000 jobs. The prior two revisions were also negative, with the bureau finding 266,000 fewer jobs in 2023 and 589,000 fewer in 2024 than initially reported.

U.S. officials have blamed the inaccuracies on response errors, nonresponse bias, and issues with the birth-death model.

“This year’s preliminary benchmark is potentially much more consequential than a routine statistical footnote,” Marc Chandler, chief market strategist at Bannockburn Capital Markets, said in an Aug. 22 research note.

“The monthly [Current Employment Statistics] survey has been telling us one story about employment growth, while other indicators have increasingly suggested something weaker.”

President Donald Trump fired Bureau of Labor Statistics Commissioner Erika McEntarfer last summer, citing erroneous data.

“We need accurate Jobs Numbers,” Trump wrote on Truth Social in August 2025. “She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes.”

The White House selected top economist E.J. Antoni as McEntarfer’s successor, only to withdraw his nomination weeks later.

Brett Matsumoto, who previously served on the White House Council of Economic Advisers, was eventually appointed commissioner of the bureau and confirmed by the Senate this month.