New Jobless Claims Hit Lowest Level in a Month

States such as Texas, Georgia, and New York saw a dip in people filing these claims.

Hundreds of people line up outside a Kentucky Career Center, hoping to find assistance with their unemployment claims in Frankfort, Ky., on June 18, 2020. Bryan Woolston/Reuters

The number of Americans filing new jobless claims has fallen, while the number of people who previously filed for these benefits and continue to receive them has increased, according to the latest government data.

Initial jobless claims—people who newly filed for unemployment benefits—was 219,000 for the week ending Dec. 21, the U.S. Department of Labor said in a Dec. 26 statement. This was lower than the forecast of 223,000 claims and less than the previous week’s number. It is also the lowest level in the past four weeks.

The biggest increases in initial claims for the week ending Dec. 14 were seen in Nebraska, Kentucky, Colorado, Rhode Island, and Delaware. The largest decreases were seen in New York, Texas, California, Pennsylvania, and Georgia.

Continuing claims—people who are unemployed and continue to receive benefits—hit 1.91 million for the week ending Dec. 14. This was higher than the previous week’s 1.86 million.

The continuing claims data suggest that those who have lost work are finding it harder to secure new jobs, remaining on benefit rolls for a longer period and pushing up the ranks of those collecting unemployment benefits beyond the first week.

“The rate of hiring has clearly slowed, based on evidence from a variety of economic data releases, driving the trend in continuing claims higher,” Jefferies U.S. economist Thomas Simons said in a note. “However, the data also shows that the rate of firing/lay-offs has not accelerated accordingly. This is unusual as there is typically an inverse correlation between the rates of hiring and firing, but current conditions reflect an acknowledgment that labor supply is scarce, likely to become more scarce, and thus more valuable to retain than it was in the past.”

A Dec. 5 report from outplacement company Challenger, Gray & Christmas Inc. showed a slowdown in hiring.

“U.S. employers have announced 761,954 hiring plans, down 2% from the 777,101 plans recorded through November last year,” the report said. It is the lowest level of hiring plans since 2015.

Fed Policy

The state of the labor market is a key influencer in the U.S. Federal Reserve’s decision to lower its benchmark interest rates.

During a Dec. 18 press conference following a Fed meeting, Federal Reserve Chair Jerome Powell suggested that even though the labor market has “cooled from its formerly overheated state,” it remains solid.

While the Fed cut rates during the recent meeting, it indicated that rate cuts could be slower than expected next year.

“If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy more quickly,” Powell said.

The Fed has so far cut rates by 100 basis points this year.

“For additional cuts, we’re going to be looking for further progress on inflation, as well as continued strength in the labor market,” Powell said. “And as long as the economy and the labor market are solid, we can be cautious about, as we consider further cuts.”

ING Bank expects the Fed to keep rates steady in its January meeting. President-elect Donald Trump has proposed several tariff, tax, and spending plans for 2025 that are expected to determine “how far the Fed can cut” next year, according to the bank’s Dec. 18 update.

“There is a huge amount of uncertainty given a lack of clarity on how far and how fast President Trump will go on policy, plus how quickly the jobs market is actually cooling and what this means for inflation,” the bank said. “As such, we will keep our forecasts unchanged for now.”

ING retained its forecast of three 25-point rate cuts next year rather than the two reductions suggested by the central bank.

Reuters contributed to the report.