U.S. applications for unemployment benefits saw a significant drop during Thanksgiving week, a decline that could impact the Federal Reserve’s decision on another interest rate cut when it meets next week.
Claims fell to 191,000 during the week ending Nov. 29, a drop of 27,000 from the previous week’s 218,000 claims, according to statistics released by the Labor Department. That’s the lowest level of claims since Sept. 24, 2022, when 189,000 such claims were filed. According to The Associated Press, analysts surveyed by the data provider FactSet had forecast initial claims of 221,000.
Kathy Bostjancic, chief economist at Nationwide, told the AP that unemployment benefit filings are often distorted by the Thanksgiving holiday, which can cause some people who may have lost jobs to delay filing claims. Still, the low claims figure also 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 labor market is kind of frozen,” Bostjancic said. “Companies are in wait-and-see mode.”
On Wednesday, private payroll data firm ADP estimated U.S. job losses of 32,000 in November. The surprisingly weak report may be discouraging for people looking for jobs, but it bolstered expectations that the Fed will cut its main interest rate next week.
Complicating the Fed’s upcoming decision is inflation, still lingering above the central bank’s 2% target. The Fed’s preferred measure of inflation will be released in a government report on Friday and will also be factored into its rate call on Wednesday.
