Fewer Americans Apply for Unemployment, but Challenges Persist
The Labor Department reported on Thursday that new jobless claims fell by 6,000 to 213,000 for the week of November 16. This was lower than analysts’ forecast of 220,000.
This indicated that number of Americans applying for unemployment benefits dropped.
“There is no sign of incipient recession in these figures,” said Carl Weinberg, chief economist at High Frequency Economics. “The labor market is softening but not imploding.”
According to the report by Reuters the total number of people continuing to collect unemployment benefits rose by 36,000 to 1.91 million for the week of November 9. This was the highest in three years and more than expected.
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While new claims remain at healthy levels some people receiving benefits are struggling to find new jobs. This suggests that demand for workers is slowing even though the economy is still strong.
The four-week average of jobless claims which smooths out weekly changes, fell by 3,750 to 217,750. Weekly applications are often seen as a measure of layoffs in the U.S.
In response to weakening job data and lower inflation, the Federal Reserve cut interest rates in September by 0.5% and by another 0.25% earlier this month.
The Fed had expected to lower rates four more times next year after three cuts this year. However, stronger-than-expected economic reports and President-elect Donald Trump’s policies have shifted their approach. The Fed may now raise rates or cut them less than originally planned.
The central bank is trying to balance lowering inflation without triggering a recession. This move is known as a “soft landing.” The September rate cut was the first in four years after steady increases pushed rates to a 20-year high of 5.3% in 2022.
Inflation has been steadily falling, nearing the Fed’s 2% target. In October, a key inflation measure hit its lowest level in three-and-a-half years.
Jobless claims earlier this year averaged 213,000 per week but rose to 250,000 in July, showing the impact of high interest rates on the job market.
Reports are indicating that in October the U.S. added only 12,000 jobs, partly due to strikes and hurricanes.
