Initial Unemployment Insurance (UI) claims increased by 25,000 in the week ending December 20, rising to 214,000. The four-week moving average of claims, which smooths out some of the weekly volatility in this data set, came in at 202,250 (versus a revised 203,750 in the week prior). Overall, UI Claims remain low by historical standards. The 200,000 mark appears to be a solid floor for the Initial Claims measure, with the weekly results having bouncing upward from that level once reached throughout the second half of 2023 and now to open 2024. 

Continuing claims fell by nearly 65,000 to 2.058 million in the week ending January 13. This decline pulls Continuing Claims back from its highest level since before the pandemic threw labor markets into chaos (2.142 million, January 11, 2020), but is still up sharply from recent lows in the 1.5 million range seen in September and October of last year. The dichotomy between exceptionally low Initial Claims and the recent spike in Continuing Claims suggests that the U.S. labor market is slowing, and that workers who lose their jobs are having a more difficult time finding new work. 

Payroll job growth slowed throughout 2023, through remaining firmly positive overall. 2023Q4 saw an average monthly gain of approximately 165,000 jobs per month as compared to 284,000 per month gains in 2022Q4. One concern that emerged from the January 2024 Employment Situation Report from the Bureau of Labor Statistics is that while private industry hiring totaled 216,000 in December 2023, many of those jobs were in Education & Healthcare industries – which are closely tied to government spending and often lagging in their reaction to current labor market conditions (i.e., slow to lay off workers). 

Persistent difficulty in hiring certainly plays a part in those sectors’ job creation regardless of broader hiring trends, but the contrast against barely-positive Professional & Business Services hiring (+13,000) on the heels of three (3) consecutive months’ worth of declines provides some context to total employment growth in the U.S. economy as compared to Unemployment Insurance Claims. The spike in Continuing Claims that began in December 2023 and has now persisted into the opening weeks of 2024 is not just an aberration, and any further layoffs across the U.S. economy are likely to induce increasingly more harm on consumer spending and confidence as finding new opportunities becomes more of a challenge.