The number of new jobless claims fell to the lowest level since April last year, as the job market showed signs of strength amid a broader employment downturn.
The number of new unemployment insurance claims filed in the week ending December 28 was 211,000, down 9,000 from the previous week's level.
Economic forecasters had expected the number of jobs to rise by about 5,000 to 225,000. Claims data tends to be more volatile at the end of the year due to seasonal employment factors.
The four-week average number of applications fell by 3,500 to 223,250. The percentage of workers receiving unemployment benefits fell from 1.3% to 1.2% over the week.
The Fed has faced some criticism for the size of its first half-point rate cut last September, following raised expectations for how prices and employment levels will develop this year, and the economy is running hotter than expected. It has been suggested that this is possible.
In December, the Federal Reserve raised its forecast for 2025 inflation, as measured by the Personal Consumption Expenditure Price Index, from a 2.1% annual increase to a 2.5% annual increase. The forecast for the unemployment rate was also lowered from 4.4% to 4.3%.
After cutting interest rates for the third time in a row in December, the central bank has cut the number of quarter-point rate cuts planned for this year from four to two.
Despite recent signs of strength, employment and employment conditions have generally cooled over the past year due to monetary tightening implemented by the Federal Reserve.
The average length of unemployment hit a two-year high in November, rising to about 24 weeks from 20 weeks a year earlier. The unemployment rate rose to 4.2% from its lowest point of 3.4% in 2023. During this period, the ratio of available jobs to job seekers decreased from 2:1 to 1.1:1.
