Economists expect unemployment rates to remain high in December.
The number of Americans filing new applications for jobless benefits unexpectedly fell last week, but the unemployment rate likely remained high in December amid sluggish hiring.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 214,000 for the week ended Dec. 20, the Labor Department said on Wednesday. Economists polled by Reuters had forecast 224,000 claims for the latest week. The report was published a day early because of the Christmas Day holiday.
Claims have been volatile in recent weeks amid challenges adjusting the data for seasonal fluctuations ahead of the holiday season. The labor market remains locked in what economists and policymakers describe as a “no hire, no fire” mode.
Though the economy remains resilient, with gross domestic product increasing at its fastest pace in two years in the third quarter, the labor market has almost stalled. Labor demand and supply have been impacted by import tariffs and an immigration crackdown, economists say.
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The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 38,000 to a seasonally adjusted 1.923 million during the week ending Dec. 13, the claims report showed.
The so-called continuing claims covered the period during which the government surveyed households for December’s unemployment rate.
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The elevated continued claims aligned with a survey from the Conference Board on Tuesday showing consumers’ perceptions of the labor market deteriorated this month to levels last seen in early 2021. The unemployment rate increased to a four-year high of 4.6% in November, though part of the rise was because of technical factors related to the 43-day government shutdown.
The record-long shutdown prevented data collection for October’s unemployment rate. The Federal Reserve this month cut its benchmark overnight interest rate by another 25 basis points to the 3.50%-to-3.75% range, but signaled borrowing costs were unlikely to fall in the near term as policymakers await clarity on the direction of the labor market and inflation.
– Lucia Mutikani for Reuters
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