WASHINGTON, Aug 6 (Reuters) - The number of Americans filing claims for unemployment benefits increased slightly last week, while layoffs dropped to a two-year low in July, consistent with a stable labor market.

Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 199,000 for the week ended August 1, the Labor Department said on Thursday. Economists polled by Reuters had forecast 202,000 claims for the latest week.

Claims have dropped considerably since surging in early June. Though some of the decline reflects difficulties adjusting the data for seasonal fluctuations in summer, layoffs have remained very low despite the oil price shock from the U.S.-Israeli war with Iran. There are also no signs of widespread job losses linked to the artificial intelligence buildout, with layoffs mostly confined to the technology industry.

A separate report from global outplacement firm Challenger, Gray and Christmas on Thursday showed planned job cuts by U.S.-based employers dropped 27% to 33,429 in July, the lowest level since July 2024. Announced layoffs fell 46% from a year ago. Planned layoffs so far this year are down 41% compared to the same period in 2025.

"The pace of layoffs fell dramatically this summer," said Andy Challenger, chief revenue officer at Challenger, Gray and Christmas. "Layoff plans continue to be announced primarily in 

tech, and artificial intelligence is still the story, as investments in the technology reshape organizations."  

The stable labor market gives the Federal Reserve room to focus on the inflation fallout from the Middle East conflict, now in its sixth month, economists said.

The U.S. central bank last week left its benchmark overnight interest rate in a 3.50%-3.75% range. Three members of the Fed's policy-setting committee dissented. They "preferred" a quarter-percentage-point hike.

The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 24,000 to a seasonally adjusted 1.801 million during the week ended July 25, the claims report showed. The claims data have no bearing on the Labor Department's closely watched employment report for July, scheduled to be released on Friday. 

Nonfarm payrolls likely increased by 80,000 jobs last month after rising 57,000 in June, a Reuters survey of economists showed. The unemployment rate is forecast holding steady at 4.2%. There is, however, a risk the jobless rate could edge higher after a Conference Board survey last week showed the share of consumers viewing jobs as "plentiful" dropped in July to the lowest level since February 2021.

Job growth has slowed after accelerating in the spring. An Institute for Supply Management survey on Wednesday showed a measure of services sector employment contracted in July, with some businesses reporting they were "seeing a small reduction at the moment, some coinciding with AI implementation."

Though the Challenger report showed announced hiring plans jumped 47% in July to a four-year high of 16,095, the increase was off a very low base. Companies have so far this year announced plans to hire 107,500 workers, up 25% from the same period in 2025.