U.S. unemployment claims dropped to 214,000 last week, marking another decline in new jobless applications as companies continue avoiding major layoffs.
The Labor Department reported Wednesday that weekly claims fell by 10,000 from the previous week's 224,000, coming in below the 232,000 forecast from FactSet analysts. The four-week moving average, which smooths weekly volatility, declined by 750 to 216,750.
Applications for unemployment benefits serve as a real-time proxy for layoffs, with current levels remaining at historically healthy benchmarks. New claims typically run around 250,000 to 300,000 weekly in a normal economy, making the current figures lower than historical averages.
Despite the positive claims data, broader labor market indicators show mixed signals. The unemployment rate rose to 4.6% in November, reaching its highest level since 2021. Continuing claims, which track Americans already receiving benefits, increased by 38,000 to 1.92 million for the week ending December 13.
The October jobs report revealed a net loss of 105,000 positions, driven primarily by a 162,000 reduction in federal workers. Many resigned at the end of fiscal year 2025 on September 30 amid pressure from Elon Musk's government payroll purge. November showed modest gains of 64,000 jobs.
Hiring momentum has clearly slowed, with monthly job creation averaging just 35,000 since March compared to 71,000 in the year ending March 2025. Labor Department revisions removed 33,000 jobs from August and September payrolls.
Federal Reserve Chair Jerome Powell expressed concern that the job market may be weaker than current data suggests. Earlier this month, the Fed implemented its third consecutive quarter-point rate cut, with Powell noting recent job figures could be revised downward by as much as 60,000.
Major corporations including UPS, General Motors, Amazon, and Verizon have announced workforce reductions, though these cuts typically take months to appear in government statistics. The current labor market represents what Federal Reserve Chair Jerome Powell and economists have described as a "low-hire, low-fire" environment.
The weekly unemployment report was released a day early due to the Christmas holiday. While claims data suggests stability in layoff patterns, the broader employment picture reflects ongoing challenges from Trump administration tariffs and lingering effects of pandemic-era interest rate policies.
