U.S. Weekly Jobless Claims Unexpectedly Fall, Labor Market Strengthens
New jobless applications in the United States declined last week, signaling continued strength in the labor market.
According to the Labor Department, initial claims for unemployment insurance fell by 16,000 to 207,000 for the week ending January 25. This figure came in lower than analysts' estimates of 225,000.
The four-week average, which smooths out weekly fluctuations, dropped by 1,000 to 212,500.
Despite some signs of labor market softness in 2024, job availability remains high and layoffs stay historically low.
Earlier this month, the Labor Department reported strong job growth and a declining unemployment rate in December. Employers added 256,000 new jobs, and the unemployment rate fell to 4.1%.
The solid job growth of 2024 came in the context of higher interest rates. On Wednesday, however, the Federal Reserve kept its benchmark interest rate unchanged after cutting rates three times in late 2024.
Fed officials are monitoring inflation and the labor market for indicators of economic weakness. They anticipate only two rate cuts in 2025, reducing their previous projections of four.
While layoffs remain low by historical standards, notable companies have implemented job cuts in recent months. Meta (parent company of Facebook) announced 5% staff reductions, while Brown-Forman (producer of Jack Daniel's) is laying off approximately 12% of its global workforce. GM, Boeing, Cargill, and Stellantis also announced layoffs in late 2024.
The total number of Americans receiving unemployment benefits fell by 42,000 to 1.86 million for the week ending January 18.