The number of Americans filing for unemployment benefits last week unexpectedly fell to the lowest level in 16 months, evidence that the labor market remains resilient even in the face of high interest rates and inflation.
Figures released Thursday by the Labor Department show initial claims for the week ending Jan. 13 plunged by 16,000 to 187,000, below the 2019 pre-pandemic average of 218,000 claims. It marks the lowest level for jobless claims since September 2022.
Continuing claims, filed by Americans who are consecutively receiving unemployment benefits, also fell to 1.8 million for the week ended Jan. 6, a decrease of 26,000 from the previous week.
THE NUMBER OF HIGH-PAYING JOBS IS DWINDLING
“The labor market continues to show signs of resilience despite the rapid pace of interest rate hikes that the Fed initiated close to two years ago,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
The stronger-than-expected data could have major implications for the Federal Reserve, which is trying to cool the economy — and the labor market — through a series of aggressive interest rate hikes. Policymakers have signaled in recent weeks that rate increases may be over but have given no guidance on when they may begin to loosen monetary policy.
Experts say that central bankers are unlikely to cut rates until there is further evidence the labor market is softening.
US ECONOMY ADDS 216K JOBS IN DECEMBER, BEATING EXPECTATIONS
“The story this week continues to be robust economic data, and how it may keep rate cuts on ice for a while,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley. “Until we start to consistently see softer numbers, especially in the labor market, the Fed will likely stick to its higher-for-longer stance.”
The labor market has remained historically tight over the past year, defying economists’ expectations for a slowdown. Although economists say it is beginning to normalize after last year’s blistering pace, it is nowhere near breaking.
The Labor Department reported at the start of the month that the economy added 216,000 jobs in December, pointing to a gradually slowing labor market.
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