Number of Americans applying for unemployment benefits drops to 191,000, reaching lowest level since September 2022

WASHINGTON Applications for U.S. unemployment benefits declined to a three-year low last week, adding complexity to the Federal Reserves upcoming interest rate considerations. For the week ending November 29, claims fell to 191,000, down from 218,000 the prior week, according to the Labor Department. This represents the lowest level since September 24, 2022, when 189,000 claims were reported. Analysts polled by FactSet had anticipated 221,000 claims.

Unemployment claims serve as a near-term indicator of layoffs and the broader labor markets condition. Recent announcements of job cuts by major companies such as UPS, General Motors, Amazon, and Verizon may take weeks or months to affect official statistics, so Thursdays figures may not fully reflect those changes.

The labor market currently shows a low-hire, low-fire pattern, maintaining historically low unemployment while leaving some job seekers struggling to find employment. Private payroll processor ADP reported an estimated 32,000 U.S. job losses in November, a weak outcome that could discourage job seekers but simultaneously raises expectations of a Fed interest rate cut next week.

The Federal Reserves rate decision is also influenced by inflation, which remains above its 2% target. The central banks preferred inflation measure will be released on Friday and will factor into their policy choice. Government data showed a slight rebound in hiring in September, with employers adding 119,000 jobs, though August experienced job losses. The unemployment rate rose to 4.4%, the highest in four years, as more Americans entered the labor force but did not all immediately find employment. Comprehensive November jobs data is delayed until later this month, after the Fed meeting, due to the previous government shutdown.

Additional economic indicators show mixed signals. Retail sales slowed in September following several months of growth, consumer confidence dropped to its second-lowest level in five years, and wholesale inflation eased slightly. Together, these trends suggest a cooling economy and moderating inflation, supporting market expectations of a rate cut. If implemented, it would mark the Feds third reduction this year in an effort to support a labor market that has been weakening in recent months.

The Labor Department also reported that the four-week moving average of claims, which smooths weekly fluctuations, decreased by 9,500 to 214,750. The total number of individuals filing for benefits for the week ending November 22 declined by 4,000 to 1.94 million.

Author: Benjamin Carter