By MATT OTT, Associated Press Business Writer

WASHINGTON (AP) — The number of Americans filing unemployment claims last week fell slightly as businesses continue to retain employees despite growing economic uncertainty over U.S. trade policy.

Applications for jobless benefits fell by 2,000 to 227,000 for the week ending May 17, the Labor Department said Thursday. That’s pretty close to the 230,000 new applications analysts forecast.

Weekly applications for jobless benefits are seen as representative of U.S. layoffs and have mostly bounced around a historically healthy range between 200,000 and 250,000 since COVID-19 ravaged the economy and wiped out millions of jobs five years ago.

Even though President Donald Trump has paused or dialed down many of his tariff threats, concerns remain about a global economic slowdown that could upend the U.S. labor market, which has been a pillar of the American economy for years.

The U.S. and China last week agreed to a 90-day pause in their trade war, giving financial markets a boost and at least temporarily relieving some of the anxiety over the impact of tariffs on the U.S. economy.

Earlier this month, the Federal Reserve held its benchmark lending rate at 4.3% for the third straight meeting after cutting it three times at the end of last year.

Fed chair Jerome Powell said the potential for both higher unemployment and inflation are elevated, an unusual combination that complicates the central bank’s dual mandate of controlling prices and keeping unemployment low.

Powell said that tariffs have dampened consumer and business sentiment and the government recently reported that the U.S. economy shrank at a 0.3% annual pace in the first quarter of 2025. Growth was slowed by a surge in imports as companies in the U.S. tried to bring in foreign goods before Trump’s massive tariffs went into effect.

Trump is attempting to reshape the global economy by dramatically increasing import taxes to rejuvenate the U.S. manufacturing sector.

Trump has also promised to drastically downsize the federal government workforce, but many of those cuts are being challenged in the courts and Congress.

It’s not clear if or when the job cuts ordered by the Department of Government Efficiency — or “DOGE,” spearheaded by billionaire Tesla CEO Elon Musk — will surface in the weekly layoffs data.

Despite showing some signs of weakening during the past year, the labor market remains robust, with plentiful jobs and relatively few layoffs.

Earlier this month, the government reported that U.S. employers added a surprisingly strong 177,000 jobs in April and the unemployment rate held at a historically healthy 4.2%.

Many economists still anticipate that a negative impact from trade wars will materialize this year for American workers.

Microsoft last week began laying off about 6,000 workers, nearly 3% of its workforce and its largest job cuts in more than two years.

Other companies that have announced job cuts this year include Workday, Dow, CNN, Starbucks, Southwest Airlines and Facebook parent company Meta.

The Labor Department also reported Thursday that the four-week average of claims, which evens out some of the week-to-week ups and downs during more volatile stretches, rose by 1,000 to 231,500.

The total number of Americans receiving unemployment benefits for the week of May 10 climbed by 36,000 to 1.9 million.