As the job market continues to exhibit resilience in the face of efforts by the Federal Reserve to chill the economy, applications for unemployment benefits in the United States decreased to their lowest level in 15 weeks.
The Labor Department announced on Thursday that the number of Americans requesting unemployment benefits for the week ending January 7 decreased by 1,000 from 206,000 the previous week to 205,000.
Last week’s total was raised by 2,000 to 206,000.
The claims’ four-week moving average, which lessens the week-to-week volatility, decreased by 1,750 to 212,500.
Jobless claims are often seen as a proxy for layoffs, which have been relatively low since the epidemic wiped off millions of employees in the spring of 2020.
Federal Reserve policymakers, who raised interest rates seven times last year to limit job growth and lower stubbornly high inflation, keep a close eye on the labor market.
The government said this week that employers in the United States created a respectable 223,000 new jobs in December, demonstrating the economy’s strength even as the Fed quickly raises interest rates to restrict economic growth and the rate of employment.
3.5% was the lowest unemployment rate in 53 years.
Even with the respectable statistics, December’s jobs data hinted that the labor market might be cooling in a way that might benefit the Fed’s fight against high inflation.
It extended a hiring slump that started last year and was the weakest growth in two years.
Average hourly salary growth dropped to its worst pace in 16 months.
The pressure on businesses to raise prices to cover their more extraordinary labor expenses may lessen due to the downturn.
Also Thursday, the government announced that growing consumer prices in the United States eased again last month, bolstering hopes that inflation’s grip on the economy will continue to lessen this year and likely require less dramatic action by the Federal Reserve to manage it.
Compared to a year ago, inflation decreased to 6.5% in December, according to the government.
It was the sixth consecutive deceleration from the previous year.
Prices fell by 0.1% from November to December every month, the first decrease since May 2020.
In forecasts updated this month, the Fed’s officials expected slower growth and increased unemployment for next year and 2024.
By the end of 2023, the unemployment rate is anticipated to increase to 4.6%.
That would indicate a sharp rise in unemployment and often indicate a recession, as many experts have forecast.
Mortgage and auto loans are now more expensive for customers, and credit card interest rates have increased due to the Fed’s rate increases from the previous year.
Mortgage rates have increased to almost 6%, more than doubling where they were before the Fed’s start of tightening credit.
Higher mortgage rates have severely impacted the housing sector, with existing home sales falling for ten consecutive months.
Even while the U.S. labor market is still strong, there have been an increasing number of layoffs in the technology industry, which is struggling with declining demand as rising prices strain businesses and families.
Last week, Amazon announced that it was laying off 18,000 people, while the software company Salesforce, owner of Slack, indicated it was slashing roughly 8,000 jobs.
Twitter, Doordash, Meta’s parent company, and other companies have all recently announced layoffs.
In the week that ended December 31, 1.63 million persons were receiving unemployment benefits, a decrease of 63,000 from the previous week.