- Initial claims for unemployment were 202,000 in the week ending December 9, down by 19,000 from the previous week. The four-week moving average fell by 8,000 to 213,000.
- Continuing claims rose by 20,000 to 1.876 million in the week ending December. The four-week moving average of continuing claims rose to its highest level this year.
- The initial and continuing claims data are consistent with a strong labor market but easing job growth.
Initial claims for unemployment insurance fell to 202,000 in the week ending December 9, down from 221,000 in the previous week. The four-week moving average of initial claims, which smooths out some of the volatility, fell to 213,000 in the week ending December 9. After increasing to around 250,000 per week in the summer of 2023, initial claims have fallen this autumn to around 215,000. Although this is up somewhat from late 2022 and early 2023, initial claims remain very low and are at a level consistent with solid job growth and a strong labor market.
Continuing unemployment insurance claims rose to 1.876 million in the week ending December 2, up from 1.856 million the previous week (revised lower from 1.861 million). The four-week moving average of continuing claims was 1.875 million in the week ending December 2, up by 4,000 from 1.871 million (revised slightly lower). This is the highest level for the four-week moving average for continuing claims thus far in 2023.
Continuing claims have gradually increased since bottoming out at around 1.3 million in the fall of 2022 but remain low on an historical basis. However, the rapid increase in continuing claims in October through early-December is an indication that recently laid-off workers are taking a somewhat longer time to find a new job. Some part of this rise could be from laid-off workers in auto related industries during the UAW strike who are only getting back to work in recent weeks. Also, retail hiring has been soft so far this holiday season which has reduced job opportunities for laid-off workers in other industries.
In summary, layoffs are up somewhat, job growth is slowing to a more sustainable pace, and it is a bit harder for unemployed workers to find a new job. From the Federal Reserve’s perspective, these are welcome developments. The central bank would like to see a bit more slack in the labor market which will slow wage growth and reduce inflationary pressures, allowing inflation to gradually ease to the Fed’s 2% objective. This reinforces the FOMC and Powell “pivot” announced yesterday all but saying the rate hiking cycle is over and rate cuts discussions have begun. The question is not if but when the FOMC begins rate cuts and by how much? PNC expects the first 25 bps rate cut in July 2024 followed by 25 bps cuts in both September and December 2024. A total decline of 75 bps in the Fed funds rate is also the median FOMC forecast for the coming year.
