Initial claims for US unemployment benefits fell sharply last week, dropping to their lowest level in more than two years in a sign that layoffs remain muted even as hiring slows across the economy.
The Labour Department said on Thursday that claims fell by 27,000 to a seasonally adjusted 191,000 for the week ending November 29, the lowest reading since September 2022.
Economists polled by Reuters had expected a rise to 220,000.
The decline offers some reassurance after recent indicators suggested the labour market may be losing momentum.
Continuing claims, which serve as a proxy for the number of people receiving benefits for longer than a week, dipped by 4,000 to 1.939 million for the earlier period.
Although elevated compared to the immediate post-pandemic recovery, the figures remain consistent with relatively low levels of layoffs.
Holiday distortions but signs of stability
Labour market data often fluctuates around holidays, making short-term readings more volatile.
Still, officials and analysts noted that the latest figures align with broader evidence that employers are holding on to workers even as hiring activity slows.
The drop in claims comes after the ADP report showed the steepest decline in private payrolls in more than two and a half years in November, stoking concerns about weakening job growth.
Economists described the current backdrop as a “no fire, no hire” environment: employers are not laying off staff in significant numbers but are also pulling back on recruitment.
The previous week’s claims level was revised up by 2,000 to 218,000.
The four-week moving average, considered a more reliable measure of underlying trends, fell by 9,500 to 214,750.
Labour market awaits delayed November jobs report
The full government jobs report for November, originally due Friday, has been pushed to December 16 as federal statistical agencies continue to recover from disruptions caused by the recent government shutdown.
The most recent available report, from September, showed the economy added 119,000 jobs and unemployment rose to 4.4%.
Unadjusted data showed initial claims totalled 197,221 for the latest week, down 20% from the prior period and well below the seasonal expectation for the week.
A sharp fall of almost 20,000 claims in California was the biggest contributor to the overall decline, while Texas recorded a decrease of 8,349, based on unadjusted data.
The Labour Department said seasonal factors had projected a drop of 21,172 from the previous week.
The unadjusted insured unemployment rate slipped to 1.1%.
The insured unemployment rate on a seasonally adjusted basis held steady at 1.3%. The four-week moving average of insured claims edged down to 1.945 million.
Federal Reserve meeting looms amid rate-cut debate
The Federal Reserve’s rate-setting committee meets next week, with officials divided over how quickly to cut rates.
At least five of the 12 voting members have signalled hesitancy or resistance to further reductions, while several Board of Governors members favour lowering borrowing costs.
For now, the latest claims data may ease concerns that the labour market is deteriorating sharply, even as the broader picture continues to point to slower hiring heading into year-end.
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