A recent Labor Department report has highlighted a more significant than anticipated downturn in first-time claims for U.S. unemployment benefits for the week ending December 14th. According to the data, initial jobless claims decreased to 220,000, reflecting a drop of 22,000 from the previous week's stable figure of 242,000. Economists had predicted a smaller reduction to 230,000.
This unexpected decline follows a period of rising jobless claims over the preceding two weeks, during which claims had moved away from their lowest levels in over half a year. "The substantial decrease in initial jobless claims for the week ending December 14th can be attributed to seasonal factors influencing the weekly data fluctuations," explained Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
In addition, the report noted that the more stable four-week moving average observed a slight increase to 225,500, rising by 1,250 from the previous week's unchanged figure of 224,250.
Continuing claims, which track the number of individuals receiving ongoing unemployment benefits, saw a decrease of 5,000, settling at 1.874 million for the week ending December 7th. Similarly, the four-week moving average of continuing claims experienced a reduction, falling to 1,880,250, a decline of 6,000 from the revised average of 1,886,250 for the prior week.
Vanden Houten further analyzed, "The current levels of both initial and ongoing claims align with Fed Chair Powell's labor market overview presented at the recent FOMC meeting—hiring has decelerated, but layoffs remain minimal." She continued, "While these claims figures do not change our projection that the Federal Reserve will reduce rates three times next year, the possibility of fewer cuts exists, especially in light of indications from Fed officials suggesting a preference for potentially just two rate cuts."
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