WASHINGTON – U.S. applications for unemployment benefits dropped to their lowest level in over three years last week, signaling continued strength in the labor market and adding complexity to the Federal Reserve’s upcoming interest rate decision. For the week ending Nov. 29, initial claims fell to 191,000, down from 218,000 the previous week, marking the lowest point since September 24, 2022, when claims were 189,000. Economists had expected 221,000 new claims.
Unemployment claims are considered a near-real-time indicator of layoffs and overall job market health. Recent announcements of job cuts by major companies like UPS, General Motors, Amazon, and Verizon may not yet be reflected in the data. Overall, the U.S. job market remains in a “low-hire, low-fire” state, keeping unemployment historically low but making it difficult for those currently out of work to find new positions. The four-week moving average of claims, which smooths out weekly fluctuations, fell by 9,500 to 214,750. The previous week’s total number of continued claims dipped by 4,000 to 1.94 million.
Other economic indicators provide a mixed picture. Private payroll data from ADP estimated a loss of 32,000 jobs in November, while government reports showed modest gains in September and a slight uptick in the unemployment rate to 4.4% as more Americans returned to the workforce. Retail sales slowed in September after three months of growth, and consumer confidence is near its second-lowest level in five years. Meanwhile, inflation remains above the Federal Reserve’s 2% target, with the Fed’s preferred measure set for release on Friday. Analysts suggest that the combination of a slowing economy and easing inflation may increase the likelihood of the Fed cutting its benchmark interest rate next week, potentially marking the third reduction of the year.