The number of Americans filing new applications for jobless benefits dipped to the lowest in a month last week

The number of Americans filing new applications for jobless benefits dipped to the lowest in a month last week, consistent with a cooling but still-healthy U.S. labor market that is likely to keep Federal Reserve officials from cutting interest rates any further in the near term.

Initial claims for state unemployment benefits fell by 1,000 to a seasonally adjusted 219,000 for the week ended Dec. 21, the Labor Department said on Thursday. Economists polled by Reuters had forecast 224,000 claims for the latest week, reports Reuters.

The claims data has been somewhat choppy since Thanksgiving, which economists see resulting from seasonality issues associated with the increase in temporary workers that businesses bring on board for the holiday season. Still, the level of new benefits claims was in line with its average over the last year of just over 220,000, with little indication of moving higher as layoffs remain muted.

Meanwhile, those who have lost work are finding it harder to find a new job and are remaining on benefits rolls for a longer stretch and pushing up the ranks of those collecting unemployment benefits for more than the first week.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 46,000 to a seasonally adjusted 1.910 million – the highest since November 2021 – during the week ending Dec. 14, the claims report showed. Economists had been expecting the level of continued claims to be 1.880 million.

The average duration of unemployment in November was 23.7 weeks, the longest since April 2022, and has climbed steadily in recent months from fewer than 20 weeks in April. Still, the level of continued claims is only about 100,000 higher than it was a year ago, and while it has been edging up over the past 12 months, it has so far shown no sign of shooting higher as typically occurs in a deteriorating labor market.

The continued claims data coincided with the survey week for the December nonfarm payrolls report, which will be released on Jan. 10, and suggests the pace of hiring likely has slowed this month from the 227,000 jobs added in November.

“The rate of hiring has clearly slowed, based on evidence from a variety of economic data releases, driving the trend in continuing claims higher,” Jefferies U.S. economist Thomas Simons said in a note.

“However, the data also shows that the rate of firing/lay-offs has not accelerated accordingly. This is unusual as there is typically an inverse correlation between the rates of hiring and firing, but current conditions reflect an acknowledgement that labor supply is scarce, likely to become more scarce, and thus more valuable to retain than it was in the past.”

Simons currently is forecasting 170,000 new jobs for the December employment report, but said he expects to refine that estimate as new information surfaces in coming weeks.

The latest claims data is unlikely on its own to influence the thinking of Fed officials, who last week lowered interest rates for the third time since September but signaled they are likely to take a break from further reductions with risks between the job market and inflation seen as roughly in balance.

After concerns about the job market motivated policymakers to kick off rate cuts with an outsized half-percentage-point cut in September, data since then has given them greater confidence that the job market is cooling in an orderly fashion. At the same time, progress on bringing the rate of inflation back to their 2% target has stalled, motivating officials to adopt a wait-and-see posture regarding future adjustments to interest rates.