U.S. jobless claims are steady, but continuing claims are rising to their highest level in three years

The number of Americans applying for unemployment benefits remained unchanged last week. However, permanent damage rose to its highest level in three years.

The Labor Department said Thursday that applications for unemployment benefits fell by 1,000 to 219,000 in the week of Dec. 21. That’s less than the 223,000 analysts predicted.

As claims continued, the total number of Americans collecting unemployment benefits rose by 46,000 to 1.91 million in the week of Dec. 14. That’s more than analysts predicted and the highest number since the week of November 13, 2021, when the labor market was still recovering from the crisis. COVID-19 jobs will be wiped out in the spring of 2020.

The increasing number of ongoing claims suggests that some benefit recipients are finding it more difficult to find new employment. That could mean demand for workers is declining even though the economy remains strong.

The four-week average of weekly claims, which somewhat tempers week-to-week volatility, rose 1,000 to 226,500.

Weekly jobless claims are considered representative of layoffs in the United States.

The labor market has shown some signs of slowing recently, but remains broadly healthy and has held up better than many economists had predicted given years of elevated interest rates. The Federal Reserve introduced a series of interest rate hikes in 2022 and 2023 to try to curb four decades of high inflation that emerged as the U.S. economy recovered from a brief but sharp pandemic recession.

In response to generally declining inflation, the Fed cut its key interest rate for the third straight time last week, but is still above the Federal Reserve’s target of 2%. The Fed surprised markets when it predicted just two interest rate cuts in 2025, down from four previously.

Earlier this month, the government reported that U.S. job openings rose to 7.7 million in October, after hitting 7.4 million in September, the lowest level in three and a half years.

In November, U.S. employers added a significant 227,000 jobs, up from a meager 36,000 in October, when the impact of strikes and hurricanes sharply reduced employers’ payrolls. The government also revised its estimate of job growth in September and October by a total of 56,000.

The government’s December jobs report will be released on January 10th.