New applications for US unemployment benefits fell by 1,000 to a seasonally adjusted 209,000 in the most recent week, despite the prior week’s total being revised upward.
Economists note that seasonal adjustments and recent holidays have caused volatility in weekly jobs data, but overall labor market conditions remain largely unchanged.
The big picture: Federal Reserve Chair Jerome Powell stated that US labor market indicators are stabilizing after a period of gradual softening, with interest rates held steady.
- There is no broad evidence that layoffs are increasing; most companies trying to reduce staff are doing so through attrition rather than direct layoffs.
- Recent layoffs at United Parcel Service and Amazon.com are not expected to significantly affect nationwide jobless claims.
Zoom in: Continuing claims for unemployment benefits, which serve as a proxy for hiring, decreased by 38,000 to 1.827 million in the week ending January 17.
- Continuing claims may be falling in part because some people have exhausted the typical 26 weeks of eligibility for benefits, but are consistent with stable layoff levels.
- The jobless rate declined to 4.4% in December from 4.5% in November, but is expected to stay elevated in January amid slow hiring.
- Tepid hiring is attributed to factors including tariffs, immigration raids, and businesses adjusting staffing needs as they invest in artificial intelligence.
- The Conference Board’s employment measures weakened in January, adding to concerns about the pace of hiring.
- The unemployment rate for January is forecast at 4.35%, likely rounding to 4.4%.
