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- U.S. unemployment claims dropped again last week, remaining at a historically healthy level (pbs.org)
Unemployment Claims Dip Despite Broader Job Market Concerns
WASHINGTON D.C. – The number of Americans seeking unemployment benefits saw a slight decrease last week, maintaining what are still considered healthy levels, even as broader indicators suggest a softening in the labor market.
According to a report released Wednesday by the Labor Department – a day early due to the Christmas holiday – initial applications for jobless claims for the week ending December 20 fell by 10,000, settling at 214,000. This figure is lower than the 224,000 recorded the previous week and also below the 232,000 new applications anticipated by analysts surveyed by data firm FactSet.
Unemployment aid applications serve as a near real-time measure of layoffs and the overall health of the job market.
While the U.S. gained a respectable 64,000 jobs in November, the government previously reported a loss of 105,000 jobs in October. This October decline was largely attributed to a significant drop of 162,000 federal workers, many of whom reportedly resigned at the close of fiscal year 2025 on September 30, following what was described as pressure from billionaire Elon Musk’s efforts to reduce U.S. government payrolls.
The national unemployment rate also saw an increase last month, reaching 4.6%, its highest point since 2021. Furthermore, Labor Department revisions adjusted August and September payrolls downward by 33,000 jobs.
Overall, hiring momentum appears to have slowed. This deceleration is believed to be influenced by uncertainties surrounding President Donald Trump’s tariffs and the lingering impact of high interest rates implemented by the Federal Reserve in 2022 and 2023 to combat pandemic-driven inflation. Since March, job creation has averaged 35,000 per month, a notable decrease from the 71,000 monthly average observed in the year preceding March.
Earlier this month, the Federal Reserve cut its benchmark lending rate by a quarter-point for the third consecutive time. Fed Chair Jerome Powell indicated that the decision to reduce borrowing costs was partly driven by concerns that the job market might be weaker than current figures suggest. Powell also noted that recent job numbers could potentially be revised lower by as much as 60,000, implying that employers may have been shedding an average of approximately 25,000 jobs per month since the spring.
Major companies that have recently announced workforce reductions include UPS, General Motors, Amazon, and Verizon, though the full impact of these cuts may take months to be reflected in government data.
The Labor Department’s report also showed that the four-week average of claims, which helps to smooth out weekly fluctuations, decreased by 750 to 216,750. Additionally, the total number of Americans receiving jobless benefits for the week ending December 13 rose by 38,000 to 1.92 million.