Jobless Claims Drop as December Labor Market Stays Strong
Last week, the number of Americans filing new applications for unemployment benefits declined, reversing the increase seen a week earlier and signaling that labor market conditions remained stable in December. The Labor Department said on Thursday that initial claims for state unemployment benefits dropped by 13,000 to a seasonally adjusted 224,000 for the week ended December 13, slightly below economists’ expectations of 225,000. Claims have moved unevenly in recent weeks, reflecting ongoing difficulties in adjusting data around the Thanksgiving holiday, but overall trends suggest employers are cautious about hiring while largely avoiding mass layoffs.
Economists note that uncertainty created by President Donald Trump’s sweeping tariffs has disrupted business planning, prompting many firms to delay workforce expansion. A survey showed that tariffs remain a top concern for executives across companies of varying sizes. This hesitation is contributing to a slower pace of hiring even as broader labor market conditions remain relatively resilient.
The claims data coincided with the period used by the government to survey businesses for the nonfarm payrolls component of December’s employment report. According to the reports, nonfarm payrolls rose by 64,000 jobs in November, with December’s employment data scheduled for release in January. Although the unemployment rate climbed to 4.6 percent in November, the highest since September 2021, the increase was partly due to technical distortions linked to the 43-day government shutdown, which prevented the BLS from publishing October’s jobless rate.
Last week, Federal Reserve policymakers lowered the benchmark overnight interest rate by another 25 basis points to a range of 3.50 percent to 3.75 percent, while signaling a pause in further cuts until clearer evidence emerges on labor market and inflation trends. Meanwhile, the slower hiring environment is extending jobless spells for those already laid off. The report showed continuing claims, a proxy for hiring conditions, rose by 67,000 to a seasonally adjusted 1.897 million in the week ended December 6, underscoring lingering challenges beneath an otherwise steady labor market.
