Weekly applications for unemployment insurance in the United States experienced an unexpected decline last week, while ongoing claims have seen an increase according to recent government data released on Wednesday. The seasonally adjusted number of initial unemployment claims dropped by 10,000, bringing the total to 201,000 for the week ending on January 4, as reported by the Department of Labor.
Analysts had anticipated a figure of 215,000 based on a survey conducted by Bloomberg. Notably, the previous week's data remained unchanged at 211,000, indicating a stable labor market despite fluctuations in claims. Across the four-week moving average, the claims decreased to 213,000, reflecting a fall of 10,250 from the previously unrevised average.
On the other hand, unadjusted weekly claims saw an uptick of 21,253, bringing the total to 304,741. For the week ending on December 28, seasonally adjusted continuing claims amounted to 1.87 million, slightly above the Bloomberg consensus of 1.86 million. This segment experienced an increase of 33,000 from the prior week's figures, with revisions reflecting lower numbers.
The four-week moving average for continuing claims reported at 1.87 million, decreased by 3,000 from the previous week's downward revision as noted by the Department of Labor. Economist Thomas Simons from Jefferies expressed that while the data appears encouraging, there is no compulsion to enhance the forecasts for the upcoming nonfarm payrolls report due to timing factors within the surveys, as well as the understanding that claims only illustrate one component of the supply and demand dynamics in the labor market.
Anticipation surrounds the Bureau of Labor Statistics' report on Friday, with expectations that the U.S. economy added 163,000 nonfarm jobs in the previous month. Should this projection hold, it would represent a decreased pace compared to the 227,000 jobs added the month prior, as derived from Bloomberg's compiled survey.
Jefferies foresees a total payroll growth of 140,000 for December. In a broader context, last month the Federal Reserve reduced its benchmark lending rate by 25 basis points, signaling fewer cuts ahead compared to previous projections made in September. The Federal Open Market Committee's Summary of Economic Projections indicated that policymakers had adjusted their expectations for the unemployment rate for the years 2024 and 2025.
Simons elaborated that Friday's employment report might reveal that the central tendency forecast for unemployment has seen a slightly excessive dip; however, no alarm bells are expected to ring at the Eccles Building, which is home to the Federal Reserve's headquarters. The most significant declines in initial jobless claims for the week ending December 28 were reported in California, with a decrease of 9,263 claims, followed by Texas and Florida.
In contrast, Michigan and New Jersey accounted for the largest increases in claims according to the Department of Labor data..