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Jobless claims dropped by 9,000 to 211,000 last week, the Labor
Department reported Thursday. The four-week average of claims,
which strips out week-to-week ups and downs, fell by 3,500 to
223,250.
The overall numbers receiving unemployment benefits fell by
52,000 to 1.84 million, the lowest since September.
Thomas Simons and Sam Saliba, economists at Jefferies, called
the drops "encouraging'' in a commentary but cautioned that
seasonal adjustments around the holidays can throw off the
numbers.
The U.S. job market has cooled considerably from the red-hot
hiring days of 2021-2023 when the economy was bounding back from
COVID-19 lockdowns.
Through November, employers added an average of 180,000 jobs a
month in 2024, down from 251,000 in 2023, 377,000 in 2022 and a
record 604,000 in 2021. Still, even the diminished job creation
is solid and a sign of resilience in the face of high interest
rates.
When the Labor Department releases hiring numbers for December
on Jan. 10, they're expected to show that employers added
160,000 jobs last month.
The weekly jobless claims numbers are a proxy for layoffs, and
those have remained below pre-pandemic levels. The unemployment
rate is at a modest 4.2%, though that is up from a half century
low 3.4% reached in 2023.
To fight inflation that hit four-decade highs two and a half
years ago, the Federal Reserve raised its benchmark interest
rates 11 times in 2022 and 2023. Inflation came down — from 9.1%
in mid-2022 to 2.7% in November, allowing the Fed to start
cutting rates. But progress on inflation has stalled in recent
months, and year-over-year consumer price increases are stuck
above the Fed's 2% target.
At its December meeting, the Fed went ahead and cut its
benchmark interest rate for the third time in 2024. But the
central bank’s policymakers signaled that they’re likely to be
more cautious about future rate cuts: They projected just two in
2025, down from the four they had envisioned in September.
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