U.S. Unemployment Claims Fall to Lowest Level in Eight Months

In the United States, jobless claims unexpectedly fell last week, reaching their lowest level in eight months. According to data from the Department of Labor, initial jobless claims for the week ending December 28 fell to 211,000 from 220,000 the previous week. This figure was also below economists' expectations of 222,000.

While jobless claims tend to fluctuate during year-end holidays like the Christmas season, this decline is indicative of a healthy labor market. The four-week moving average fell to 223,250, slipping below the previous week's level of 226,750. This is seen as a sign of a labor market that is steadily slowing but not signaling economic deterioration.

Decline in continuing jobless claims Continuing jobless claims, which show the number of individuals receiving benefits after the initial claim, dropped to 1.844 million for the week ending December 21. This figure fell below economists' expectations of 1.890 million and marked a significant drop from the previous week's level of 1.896 million.

Experts attribute some of the high levels of continuing jobless claims to the impact of seasonal fluctuations on the data. Additionally, low layoffs are supporting the employment market, while there are also signs of prolonged job search durations. In November, the median duration of unemployment approached its highest levels in the past three years.

Fed's monetary policy and the employment market The Federal Reserve (Fed) cut interest rates for the third consecutive time at its last meeting in December, while limiting its projections for rate cuts in 2025 to two. This indicates that the Fed is carefully monitoring the resilience of the labor market and economic growth.

Economists expect the unemployment rate for December to remain stable at 4.2%. The decline in jobless claims suggests that the labor market continues to remain healthy and that employers are maintaining a low tendency for layoffs. However, employers continue to exercise caution in new hiring following a wave of post-pandemic recruitment.