US applications for unemployment benefits fell to their lowest level in nearly a year last week, pointing to a still healthy labor market with historically low layoffs.
The Labor Department on Wednesday said that applications for jobless benefits fell to 201,000 for the week ending January 4, down from the previous week's 211,000. This week's figure is the lowest since February of last year.
The four-week average of claims, which evens out the week-to-week ups and downs, fell by 10,250 to 213,000.
The overall numbers receiving unemployment benefits for the week of December 28 rose to 1.87 million, an increase of 33,000 from the previous week, according to The AP.
The US job market has cooled from the red-hot stretch of 2021-2023 when the economy was rebounding 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 Friday, they’re expected to show that employers added 160,000 jobs last month.
On Tuesday, the government reported that US job openings rose unexpectedly in November, showing companies are still looking for workers even as the labor market has loosened. Openings rose to 8.1 million in November, the most since February and up from 7.8 million in October,
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.
In December, the Fed 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.
