U.S. Jobless Claims Drop to 191,000, the Lowest Level in More Than Three Years

Initial claims for U.S. unemployment benefits fell sharply last week, signaling continued economic resilience even as the Federal Reserve weighs its next move on interest rates. The Labor Department said Thursday that filings for the week ending Nov. 29 decreased to 191,000, down from a revised 218,000 the previous week and the smallest tally since late September 2022. Economists surveyed by FactSet had expected 221,000 claims.

The latest figure places new claims near a three-and-a-half-year low, underscoring a labor market that remains historically tight despite high-profile layoff announcements at companies such as UPS, General Motors, Amazon and Verizon. Because corporate workforce reductions often take weeks to materialize, many of these planned cuts have yet to appear in state unemployment rolls.

Jobless claims are considered one of the most timely indicators of labor market conditions, offering near real-time insight into hiring and firing trends. While the weekly numbers can be volatile, the four-week moving average—a measure that smooths out fluctuations—also declined. That average fell by 9,500 to 214,750, reinforcing the view that layoffs remain limited in most sectors of the economy.

Continuing claims, which count people who have already been approved for benefits and remain on the rolls, slipped by 4,000 to 1.94 million for the week ending Nov. 22. The modest drop suggests that most workers who lose their jobs are finding new positions relatively quickly, though the total is still higher than levels seen earlier this year.

The strength of the labor market comes at a delicate moment for monetary policy. Federal Reserve officials meet next week to decide whether to adjust the benchmark federal funds rate for a third time this year. Investors have largely priced in a quarter-point cut, betting that softer economic data will persuade policymakers to provide additional support. Evidence of slowing inflation and weak consumer sentiment has amplified those expectations.

Yet the fresh improvement in jobless claims could complicate the central bank’s calculus. A persistently low level of layoffs may signal that demand for workers remains robust enough to keep upward pressure on wages—and, by extension, on prices. Inflation is still running above the Fed’s 2% target, and officials have indicated they need sustained progress on prices before declaring victory.

Other recent indicators send mixed signals. Private payroll processor ADP estimated on Wednesday that U.S. employers shed 32,000 jobs in November, an unexpectedly negative reading that contrasted with the low level of jobless claims. Two weeks earlier, the government reported that payrolls rose by 119,000 in September after a decline in August; that release had been delayed by a partial federal shutdown. The unemployment rate in September edged up to 4.4%, the highest in four years, as more Americans resumed their job searches.

Imagem: Internet

The shutdown has also postponed the comprehensive November employment report until later this month, meaning the Fed will not see the full picture of labor conditions before its meeting. In the meantime, policymakers will examine Friday’s release of their preferred inflation gauge, the Personal Consumption Expenditures price index, for guidance on whether price pressures are easing fast enough to justify lower rates.

Consumer-facing data point to a cooling economy. Retail sales slowed in September after three consecutive monthly increases, and consumer confidence recently fell to its second-lowest mark in five years. Wholesale inflation has moderated, supporting the view that both demand and price growth are losing momentum. If the Fed proceeds with another rate cut, it would continue a strategy aimed at cushioning the labor market from a broader slowdown.

Additional details are available in the Department of Labor’s weekly claims report, which tracks unemployment insurance filings across all states and U.S. territories.

Crédito da imagem: Associated Press