The number of Americans filing for unemployment benefits fell further last week, remaining near a seven-month low.
The Labor Department reported Thursday that unemployment claims fell by 6,000 to 213,000 for the week of November 16. This is less than the 220,000 analysts forecast.
However, continuing claims, the total number of Americans receiving unemployment benefits, increased by 36,000 to 1.91 million for the week of November 9. This is higher than expected and the highest in three years.
While the number of new people filing for unemployment aid each week remains at historically healthy levels, some of those receiving benefits are struggling to find new jobs. This suggests that demand for workers is declining, even as the economy remains strong.
The four-week average of weekly claims, which smooths out some of the weekly volatility, fell 3,750 to 217,750.
Weekly claims for unemployment benefits are considered a proxy for layoffs in the United States.
In response to weakening jobs data and falling consumer prices, the Federal Reserve cut its benchmark interest rate in September by half a percentage point and a quarter of extra point at the beginning of the month.
In September, Fed officials predicted they would cut the key rate four times next year, in addition to three rate cuts this year, but that outlook quickly changed.
Several surprisingly strong economic reports, combined with policy proposals from President-elect Donald Trump, have led to a significantly more cautious tone from the Fed, which could mean fewer cuts and higher interest rates than expected.
The central bank recently shifted its focus from controlling inflation to supporting the labor market, as it attempts to achieve a rare “soft landing”, whereby it will bring down inflation without causing a recession.
The half-point rate cut in September was the Fed’s first rate cut in four years after a series of hikes starting in 2022 that pushed the federal funds rate to a record high of 5.3% in two decades.
Despite a slight increase in October, inflation has fallen steadily over the past two years, moving closer to the Fed’s 2% target and leading Chairman Jerome Powell to declare recently that it was well below control.
The government announced in late October that the Fed’s closely watched inflation gauge had fallen to its lowest level in three and a half years.
During the first four months of 2024, applications for unemployment benefits averaged just 213,000 per week before increasing in May. They reached 250,000 in late July, confirming the idea that high interest rates were finally cooling a red-hot U.S. labor market.
In October, the U.S. economy added only 12,000 jobs, although economists pointed to recent strikes and hurricanes that temporarily shut out many jobs.
The Department of Labor reported in August that the U.S. economy created 818,000 fewer jobs between April 2023 and March of this year than initially expected. The revised total is also seen as evidence that the job market is steadily slowing, forcing the Fed to start cutting interest rates.
