The number of U.S. applications for unemployment benefits fell to the lowest level in three years during Thanksgiving week with 191,000 applications, down from the previous week’s 218,000, reported the Associated Press.
While the holiday may have disrupted Americans’ applications, AP said the low claims figure “suggests that overall layoffs remain muted, despite the high-profile announcements. Hiring is also sluggish, which makes finding a job for those out of work challenging.”
The Bureau of Labor Statistics’ employment report for November has been delayed by the government shutdown and will now be published on December 16. The government will not be publishing October's unemployment rate as the shutdown prevented data collection, Reuters wrote.
Overall, economists view the labor market as stagnant, remaining in a “no fire, no hire” state, reported Reuters. “Job cuts are prevalent in some industries and in small and medium-sized companies, and hiring is tepid at best. … But employers have announced about 1.171 million job cuts so far this year, up 54% versus the first 11 months of 2024.”
The news comes right before the Federal Reserve is set to make a decision on interest rates next week, “potentially complicating” the Fed’s plan, AP wrote. “Applications for unemployment aid are viewed as a proxy for layoffs and are close to a real-time indicator of the health of the job market. … It’s not clear how much weight this week’s layoff figures will carry with the Fed as the numbers can be volatile and prone to revisions.”
AP also reported an unemployment rate of 4.4%, the highest in four years; retail sales slowed in September after three months of increases; and consumer confidence reached its second-lowest level in five years.
“The data suggests that both the economy and inflation are slowing, which has boosted financial markets’ expectations that the Federal Reserve will reduce its key interest rate at its meeting next week. If the Fed does reduce its benchmark rate next week, it would be the third cut of the year as it attempts to support a job market that has been slowing for months,” AP wrote.
According to Reuters, “As many as five of the 12 voting policymakers on the central bank's rate-setting Federal Open Market Committee have voiced opposition to or skepticism about cutting rates further, while a core of three members of the Washington-based Board of Governors wants rates to fall.”