WASHINGTON — Recent data indicates a continued reduction in Americans seeking unemployment assistance, with jobless claims falling to 198,000 for the week ending January 10, down by 9,000 from the previous week’s 207,000, according to the Labor Department’s report released Thursday. This count was markedly lower than the anticipated 215,000 claims predicted by analysts polled by FactSet, signaling stronger resilience in the labor market than many had expected.
Applications for jobless benefits are commonly used as an immediate barometer for layoffs and provide a near real-time snapshot of employment health across the nation. The latest figures suggest layoffs remain minimal despite concerns of a weakening job market.
However, hiring activity has remained tepid. In December, employers added only 50,000 new jobs, barely shifting from a downwardly revised total of 56,000 in November. The unemployment rate experienced a slight dip to 4.4% from 4.5% in November, marking its first decrease since June, as per Friday’s government data.
Adding to this, reports showed a substantial drop in job postings in November, with businesses offering 7.1 million open positions compared to 7.4 million the month prior. This downward trend signals employers are hesitant to increase headcount despite economic growth acceleration, opting instead to hold onto existing staff, a trend economists refer to as “low hire, low fire.”
Further, layoffs have continued to decline, reflecting a strategy among companies to retain workforce levels amidst an atmosphere of uncertainty.
Underlying these trends are broader economic challenges and uncertainties. The labor market’s waning momentum is influenced by policies such as tariffs put in place under the previous administration, as well as the lingering impact of multiple interest rate hikes enacted by the Federal Reserve throughout 2022 and 2023 to curb inflation that spiked during the pandemic era.
In response to signs of softening, the Federal Reserve has adjusted monetary policy, cutting its benchmark lending rate by a quarter-point last month, marking the third consecutive reduction, aiming to support the fragile labor environment.
Federal Reserve Chair Jerome Powell has voiced growing apprehensions about the labor market’s true condition, suggesting that official job numbers might be overstated by as much as 60,000 jobs. Such a revision would imply the nation’s employers have, in fact, been reducing staff by an average of around 25,000 jobs monthly since the spring, a period coinciding with the imposition of significant import tariffs.
Several large corporations including UPS, General Motors, Amazon, and Verizon have announced workforce reductions recently, reinforcing the ongoing cautious sentiment among employers.
The Labor Department’s weekly report also highlighted a decrease in the four-week moving average of jobless claims, a metric designed to smooth out weekly volatility. This average fell by 6,500 to 205,000.
Additionally, total initial claims for the preceding week ending January 3 declined by 19,000, settling at 1.88 million, indicating a continuing trend of modest layoffs across the broader economy.