US hiring slowed, laid-off workers are experiencing difficulties finding new jobs. What does this mean?

The number of Americans filing new applications for unemployment benefits unexpectedly fell last week, pointing to a stable labor market at the start of the year though some laid-off workers are experiencing difficulties finding new jobs.Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 201,000 for the week ended Jan. 4, the Labor Department said on Wednesday. Economists polled by Reuters had forecast 218,000 claims for the latest week, Reuters reported.

While layoffs have remained low by historical standards, hiring has slowed, leaving some laid-off people to experience long spells of unemployment. The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 33,000 to a seasonally adjusted 1.867 million during the week ending December 28, the claims report showed, as per a Reuters report.

Part of the elevation in the so-called continuing claims has been attributed to difficulties stripping out seasonal fluctuations from the data. With the median duration of unemployment nearing a three-year high in November, economists will be hoping for an improvement when the government publishes its closely watched employment report for December on Friday.

The report was published a day early as federal government offices are closed on Thursday in honor of former President Jimmy Carter who died on December 29 at the age of 100.

Though claims tend to be volatile at the turn of the year, they have bounced around levels associated with low layoffs that are underpinning the labor market and broader economy. Labor market stability was underscored by government data on Tuesday showing an increase in job openings in November, with 1.13 vacancies for every unemployed person, up from 1.12 in October.The state of the jobs market is seen allowing the Federal Reserve to keep interest rates unchanged in January against the backdrop of uncertainty over the impact of proposed policies from President-elect Donald Trump’s incoming administration.Trump has pledged to cut taxes, impose or massively raise tariffs on imports and deport millions of undocumented immigrants, plans which economists warned would stoke inflation.

The U.S. central bank lowered its benchmark overnight interest rate by 25 basis points to the 4.25 per cent-4.50 per cent range at its December policy meeting. The Fed, however, projected only two rate cuts this year compared to the four it had forecast in September, when it kicked off its policy easing cycle.

The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation.

FAQs

Q1. When is Donald Trump’s inauguration event?
A1. Donald Trump’s inauguration event is scheduled on January 20.

Q2. What is current interest rate of US central bank?
A2. The U.S. central bank lowered its benchmark overnight interest rate by 25 basis points to the 4.25 per cent 4.50 per cent range at its December policy meeting.