The number of Americans who filed new unemployment benefit applications fell last week to its lowest level in a month, which is in line with the cooling of the still healthy US labor market, which could prevent the Fed from cutting interest rates further in the short term.
Initial claims for state unemployment benefits fell by 1,000 to a seasonally adjusted 219,000 in the week ended Dec. 21, the Labor Department reported. Economists polled by Reuters had forecast 224,000.
Application data has been somewhat variable since Thanksgiving Daywhich according to economists is due to seasonality problems related to the increase in temporary workers that companies hire for the Christmas season.
Still, the level of new benefit claims remained in line with last year’s average, slightly above 220,000, with little sign of increasing as layoffs remain moderate.
Meanwhile, Unemployed people have a harder time finding a new job and they remain on the benefit rolls for longer, increasing the number of people collecting unemployment benefits for more than the first week.
The number of people receiving benefits after a first week of aid, a rough indicator of hiring, increased by 46,000, to a seasonally adjusted level of 1.91 billion, the highest since November 2021, in the week ended December 14, according to the request report.
Economists expected the level of continuing claims to be 1.88 billion.
The average duration of unemployment in November was 23.7 weeksthe longest since April 2022, and has risen steadily in recent months from less than 20 weeks in April.
Still, the level of continuing claims is only 100,000 higher than a year ago, and although it has been rising over the past 12 months, it has so far shown no signs of skyrocketing, as is often the case in a deteriorating labor market.
The continuing claims data coincides with the week of polling for the December nonfarm payrolls report, due Jan. 10, and suggests the pace of hiring has likely slowed this month from the 227,000 jobs added in November. .
The pace of hiring has clearly slowed, as evidenced by a series of economic data releases, leading to an increase in the trend of continuing job applications,” Thomas Simons, an economist at Jefferies US, said in a note.
“However, the data also shows that the rate of layoffs has not accelerated accordingly. This is unusual, as there is normally an inverse correlation between hiring and firing rates, but current conditions reflect a recognition that the supply of labor is scarce, it is likely to become scarcer and therefore more valuable to retain than in the past.
Simons currently forecasts 170,000 new jobs for the December jobs report, but said he expects to refine that estimate as new information emerges in the coming weeks.
The latest data alone is unlikely to influence the thinking of agency officials. Federal Reservewhich last week lowered interest rates for the third time since September, but noted that they are likely to take some time before further cuts, as the risks between the labor market and inflation are considered more or less balanced.
After concerns about the labor market motivated policymakers to kick off rate cuts with a half-percentage point cut in September, data released since then has given them greater confidence that the labor market is cooling significantly. ordered.
At the same time, progress in putting the inflation rate at its target of 2% have stagnated, leading policymakers to take a wait-and-see approach to future interest rate adjustments.
