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U.S. initial jobless claims climbed more than expected last week, breaking from the prior week’s sharp drop to a three-year low and offering a slightly softer signal on labor market momentum ahead of the next Federal Reserve decision window.
First-time applications for state unemployment benefits rose to 236,000 in the week ended December 6, up from a revised 192,000 in the prior period and above economists’ expectations of 220,000. The previous week’s figure, initially reported at 191,000 – the lowest since 2022 – had raised questions about seasonal adjustment around Thanksgiving, but was still broadly read as evidence of a labor market that remained tight.
The less volatile four-week moving average ticked up only modestly, to 216,750 from 214,750, suggesting that despite the latest jump, claims remain within a range historically consistent with low layoff levels. Continuing claims, which track the number of people receiving benefits after an initial week of aid and are often viewed as a proxy for the ease of finding new work, slipped to 1.838 million from 1.937 million, pointing to relatively resilient hiring conditions.
The data land just as the Federal Reserve has begun to pivot policy. On Wednesday, the Fed cut the federal funds rate by 25 basis points, citing the need to support the labor market at a time when inflation pressures have eased from their peak but remain above target. However, Chair Jerome Powell gave little indication that a series of rapid follow-up cuts is assured, stressing the central bank’s data-dependent stance.
By the time policymakers convene again in late January, they will have had access to a fuller set of labor and inflation releases that had been delayed by the record-long federal government shutdown. If claims and other employment indicators were to trend higher from here, it could strengthen the case for additional easing; a renewed stabilization, by contrast, would give the Fed more room to proceed cautiously.
