Initial jobless claims fell to levels not seen in eight months. According to the latest data released, initial claims for unemployment benefits dropped to a seasonally adjusted annual rate of 211,000, marking a decrease of 9,000 from the previous week.
- This figure represents the lowest level since mid-April, defying expectations set by economists who had forecasted a slight uptick to around 222,000 claims.
The four-week moving average, which smooths out week-to-week volatility to provide a clearer picture of the labor market’s health, also indicated resilience, dropping to 223,250, down by 3,500 from the previous week’s average.
- This is the lowest four-week average in the last month, signaling a robust end to the year in terms of new unemployment applications.
Continuing claims, which reflect the number of people still receiving unemployment benefits after their initial week, there was also a notable decline. These claims fell to 1.844 million, a reduction of 52,000 from the prior week, hitting the lowest point since late September.
- This decrease in continuing claims points to a labor market where, once people secure new employment, they tend to stay employed, despite the elevated levels of these claims compared to pre-2020 figures.
Bottom Line: The unexpected decline in jobless claims at year’s end paints a nuanced picture of the U.S. labor market. On one hand, the drop in initial claims suggests that layoffs are not a significant concern, indicating that businesses are holding onto their workforce. On the other hand, the persistent elevation in continuing claims highlights a segment of the workforce experiencing longer spells of unemployment.
