The number of Americans applying for unemployment benefits fell last week as the labor market continues to show resilience despite rising interest rates.
The number of jobless claims for the week ending Dec. 30 fell by 18,000 from the previous week to 202,000, the Labor Department said Thursday. The four-week average number of applications, which smooths out some of the weekly fluctuations, fell by 4,750 to 207,750.
Overall, 1.86 million Americans received unemployment benefits in the week that ended Dec. 23, down 31,000 from the previous week and the lowest in two months.
Weekly unemployment insurance claims are a proxy for layoffs. Despite high interest rates, they remain at an abnormally low level.
The Federal Reserve has raised its benchmark interest rate 11 times since March 2022 in an effort to quell four decades of high inflation that took hold after an unusually strong economic recovery from the 2020 coronavirus recession.
Inflation has eased significantly over the past year, but remains slightly above the Fed's 2% target. The Fed has kept interest rates on hold for the past three meetings and is now signaling the possibility of three cuts next year.
When the Federal Reserve began raising interest rates, it was widely predicted that the U.S. economy would fall into recession. However, the economy and job market remained surprisingly resilient. The unemployment rate has remained below 4% for 22 consecutive months, the longest such level since the 1960s.
Job openings have declined, but remain at historically healthy levels. On Wednesday, the government reported that U.S. employers announced 8.8 million job openings in November, down slightly from October and the fewest since March 2021. But demand for workers remains strong by historical standards.
The combination of slowing inflation and low unemployment is raising hopes that the Fed is on track for a so-called soft landing, or raising rates just enough to bring down prices without triggering a recession.