Jobless claims saw a slight increase last week, and the total number of Americans receiving unemployment benefits reached its highest point in over three years.
According to the Labor Department, jobless benefit applications rose by 6,000 to 223,000 for the week ending January 18. Analysts had expected 219,000 new claims. These weekly jobless claims are often used as an indicator of layoffs.
For the week of January 11, the number of Americans receiving unemployment benefits grew by 46,000, bringing the total to 1.9 million, the highest since November 2021. This increase in continuing claims suggests that many people currently receiving benefits are facing difficulties in finding new jobs. This could indicate a potential softening in demand for workers, despite the overall strength of the economy.
The four-week average for continuing claims is roughly 100,000 higher compared to the same time last year. While there have been some signs of weakness in the labor market in 2024, jobs remain abundant, and layoffs are still at historically low levels. Earlier this month, the Labor Department reported strong job growth in December, with employers adding 256,000 new positions. The unemployment rate also dropped slightly to 4.1%.
The final jobs report of 2024 highlights that the economy and job market continued to grow at a healthy pace, even with interest rates significantly higher than before the pandemic. This strong performance suggests that the Federal Reserve may be less likely to lower borrowing costs in the near future, following three rate cuts in late 2024.
The positive job numbers indicate that the economy is transitioning into a post-COVID phase characterized by steady growth, higher interest rates, low unemployment, and slightly increased inflation. While layoffs remain relatively low by historical standards, a number of prominent companies have recently announced job cuts. Meta, the parent company of Facebook, revealed earlier this month that it would reduce its workforce by 5%. Similarly, Brown-Forman, the maker of Jack Daniel’s, announced a 12% global workforce reduction.
Additionally, toward the end of 2024, companies like GM, Boeing, Cargill, and Stellantis also reported layoffs.