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New York and Pennsylvania saw fewer people seeking unemployment benefits for the week ending December 9 even as evidence suggests that there was a slight increase of claims over a four-week average, data from the U.S. Department of Labor showed on Thursday.
For the week ending December 16, the Labor Department said unemployment claims ticked up by about 2,000 to 205,000, less than what Bloomberg economists forecasted at 215,000 initial claims.
The less-than-anticipated rise in first-time claimers of unemployment benefits was the latest signal that the labor market is rebalancing from strong hiring earlier in the year to a place where companies are slowing down their recruitment but not laying off workers.
The 4-week moving average of claims hit nearly 1.9 million, an increase of 6,000 from the previous week's revised average.
"This is the highest level for this average since December 11, 2021," the Labor Department said in a statement.
New York and Pennsylvania, along with Texas, Kentucky, and California saw the largest drop in claimants while Nevada, Massachusetts, Michigan, Arizona, and North Carolina witnessed the largest increase in people applying for unemployment benefits.
"Looking past seasonal noise, initial claims remain at levels consistent with relatively few layoffs," Nancy Vanden Houten, lead U.S. Economist at Oxford Economics, said in a note shared with Newsweek.
Vanden Houten pointed out that continued claims, which refer to repeat applicants of unemployment benefits, were relatively unchanged after weeks of going up. That dynamic suggested that some Americans who lost their jobs were struggling to get hired.
"The claims data—along with other recent labor market statistics—are consistent with a job market that is cooling but not freezing," Vanden Houten said.
The labor market has demonstrated considerable resilience amid elevated interest rates that have pushed up borrowing costs for business investment, housing and car loans. The rise in rates was instituted by the Federal Reserve in their battle against historically high levels of inflation.
Inflation has dropped considerably since last year to the current rate of 3.1 percent after soaring to 9 percent in the summer of 2022. While some experts had anticipated that the Fed's hiking of rates would slow the economy and lead to layoffs, companies have kept hiring with the unemployment rate dropping to 3.7 percent in November after jumping to 3.9 percent the previous month.
The Fed last month kept rates at their current level of 5.25 to 5.5 percent range at their latest meeting in December. Policymakers forecast the unemployment rate to hover around 4 percent over the next three years.
Fed chair Jerome Powell said this month that the central bank was encouraged that rate hikes have helped lower inflation without severely damaging the labor market.
"I would just say overall the development of the labor market has been very positive. It's been a good time for workers to find jobs and get solid wage increases," Powell told reporters earlier this month.
About the writer
Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more