- Weekly jobless claims drop 9,000 to 198,000
- Continuing claims decrease 19,000 to 1.884 million
WASHINGTON, Jan 15 (Reuters) - The number of Americans filing new applications for unemployment benefits unexpectedly fell last week, but the drop was likely due to ongoing challenges adjusting the data for seasonal fluctuations around this time of the year.
The labor market remains in what economists and policymakers have termed a "low-hire, low-fire" state. Economists say President Donald Trump's aggressive trade and immigration policies have reduced both demand for and supply of workers. Businesses also are unsure of their staffing needs as they invest heavily in artificial intelligence, which is curbing hiring.
"The picture of the labor market from the claims data, as noisy as it has been in recent weeks, is one of at least stable labor market conditions," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 198,000 for the week ended January 10, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims for the latest week.
Claims are difficult to adjust for seasonal fluctuations around the year-end holiday season and turn of the year. Unadjusted claims shot up by 31,984 to 330,684 last week. The model the government uses to iron out seasonal fluctuations from the data had pointed to an increase of 45,652 in applications last week.
"There has been an apparent seasonal pattern in seasonally adjusted data where they tend to bottom in January and peak sometime in the summer," said Gisela Young, an economist at Citigroup. "This pattern could repeat in coming weeks, so we would not expect initial claims to fall further in coming weeks. Some of this residual seasonality could be corrected when the seasonal factors are updated later in the spring."
Labor market stasis was underscored by the Federal Reserve's "Beige Book" report on Wednesday, which showed "employment was mostly unchanged" in early January. The U.S. central bank said multiple districts "reported an increase in the usage of temporary workers, with one contact reporting this allows them 'to stay flexible in uncertain times.'"
When firms were hiring, it was "mostly to backfill vacancies rather than create new positions," the Fed added.
Stocks on Wall Street were trading higher. The dollar gained versus a basket of currencies. U.S. Treasury yields were mixed.
DIFFICULT TO FIND A JOB
The government reported last week that nonfarm payrolls increased by 50,000 jobs in December. The economy added 584,000 jobs in 2025, the fewest in five years, averaging about 49,000 positions per month. The unemployment rate fell to 4.4% from 4.5% in November. But long-term unemployment remains prevalent.
The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, decreased by 19,000 to a seasonally adjusted 1.884 million during the week ended January 3, the claims report showed. The so-called continuing claims also were likely held back by seasonal adjustment issues.
Consumers' perceptions of the labor market have been deteriorating. Recent college graduates and other new job seekers, who are not eligible to collect unemployment checks, have been left stranded by the lack of hiring.
"It is more difficult to find a job now than it was during the first few years of recovery from the (COVID-19) pandemic through the first quarter of 2025," said Stuart Hoffman, senior economic advisor at PNC Financial.
Though economists expect the Fed will keep its benchmark overnight interest rate in the 3.50%-3.75% range at its January 27-28 meeting, reductions in borrowing costs are anticipated this year to safeguard the labor market.
Data this week showed inflation pressures were stable in December, but consumers faced higher food prices and rents.
Economists expect the government to report next Thursday that the Personal Consumption Expenditures Price Index, excluding the volatile food and energy components, increased 0.2% in November, matching the estimate for October. The PCE inflation data, tracked by the Fed for its 2% inflation target, was delayed by the 43-day federal government shutdown.
"The Fed will keep policy steady until June, when we expect the first of the two rate cuts in our baseline for this year," Oxford Economics' Vanden Houten said. "With inflation risks starting to recede, Fed officials are more attuned to conditions in the labor market and have more flexibility to respond to additional labor market weakness with an earlier cut."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao
Source: Reuters