Weekly applications for unemployment insurance in the US have seen a notable decline that exceeded expectations, revealed government data on Thursday. The seasonally adjusted number of initial claims decreased by 22,000, bringing the total to 220,000 for the week ending December 14, as reported by the Department of Labor.
Analysts surveyed by Bloomberg had anticipated a level around 230,000. The previous week’s figure remained unchanged at 242,000. The four-week moving average rose to 225,500, increasing by 1,250 from the prior week's unrevised average. In terms of weekly unadjusted claims, there was a drop of 57,932, bringing the total down to 251,527. "Initial jobless claims were much lower than expected in the week ended December 14, as seasonal factors continue to influence the weekly claims data," stated Nancy Vanden Houten, Lead Economist at Oxford Economics, in comments forwarded to MT Newswires.
"Continued claims saw a slight decline but remain high, particularly in regions where significant job losses have occurred." For the week ending December 7, the seasonally adjusted continuing claims amounted to 1.87 million, falling short of Bloomberg's consensus estimate of approximately 1.89 million.
Continuing claims dropped by 5,000 from the previous week’s revised level, which had been adjusted downwards by 7,000. The four-week moving average in this category is now 1.88 million, a slip of 6,000 compared to the previously adjusted figure, based on DOL data. California reported the largest rise in initial claims for the week ending December 7, with an increase of 14,411.
Texas followed with 10,011 and New York recorded 8,926. On the other hand, North Dakota saw the most significant decrease, with a reduction of 788 claims. Additionally, just a day prior, the Federal Reserve announced a 25 basis point cut to its benchmark lending rate and indicated that the pace of future cuts may likely be fewer than what was projected in September.
Economic activity has continued to see a “solid” expansion, while labor market conditions have generally softened since earlier in the year, according to the Fed's statement after its two-day meeting. Although the unemployment rate has seen a slight increase, it remains low, as emphasized by the Fed. "The levels of initial and continued claims align with the labor market picture as articulated by Fed Chair Jerome Powell after the recent FOMC meeting: hiring has slowed down, but layoffs continue to remain low," noted Vanden Houten.
"This claims data does not change our perspective that the Federal Reserve is on course to implement three rate cuts next year; however, the likelihood of fewer cuts has been amplified, especially in light of the indications from Fed officials leaning towards just two reductions.".