US weekly jobless claims hit 11-month low as hiring slowdown lingers

Weekly jobless claims in the United States have fallen to an 11-month low, signaling a resilient labor market even as hiring activity slows.

The decline underscores a steady pace of layoffs, reflecting broader economic stability, while a growing number of unemployed workers face prolonged joblessness amid weaker hiring trends.

The US Labor Department reported that the four-week moving average of claims dropped by 10,250 to 213,000, marking one of the lowest levels in recent months.

Despite seasonal volatility, claims data highlights a labor market resilient to external shocks, such as disruptions in the automotive sector.

However, December’s private payroll growth slowed, with the ADP National Employment Report showing an increase of just 122,000 jobs, compared to 146,000 in November.

Federal Reserve policymakers are closely monitoring these labor market trends as they weigh interest rate decisions against persistent inflationary pressures.

At its December meeting, the Fed trimmed its benchmark interest rate by 25 basis points, indicating a cautious approach to further easing.

With 1.13 job openings per unemployed individual, according to November data, labor demand remains robust but unevenly distributed across states like New York, Georgia, and Texas, where jobless claims recently spiked.

Uneven employment recovery

Despite the positive headline numbers, some troubling undercurrents remain.

The number of individuals continuing to receive unemployment benefits rose to 1.867 million in late December, reflecting challenges for out-of-work individuals finding new positions.

This figure aligns with a three-year high in the median duration of unemployment, according to economists.

Government data shows the labor market remains tight, but hiring momentum has slowed significantly.

This deceleration is expected to result in December nonfarm payroll additions of around 160,000 jobs, following a robust 227,000 increase in November.

Fed’s approach

The Federal Reserve’s decision to hold rates steady in January is influenced by these mixed labor market signals, alongside the anticipated economic impact of proposed fiscal policies under the incoming administration.

Analysts note that shifts in trade policies, taxation, and immigration laws could add layers of complexity to inflation and employment dynamics.

Friday’s forthcoming employment report from the Bureau of Labor Statistics will offer a clearer picture of the labor market’s trajectory, potentially shaping the Fed’s next moves.

Economists predict that the unemployment rate will hold steady at 4.2%, further emphasizing the dual challenges of moderating inflation and sustaining employment growth.

This latest data provides critical insight into the US economy’s ability to weather uncertainties while maintaining labor market stability, a cornerstone of broader economic resilience.

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