The number of Americans filing new claims for unemployment benefits rose modestly last week, suggesting the labor market continues to cool slowly.
Initial claims for unemployment benefits rose by 9,000 to a seasonally adjusted 224,000 for the week ended Nov. 30, the Labor Department said on Thursday. Economists polled by Reuters had expected 215,000 claims for the latest week.
Claims remained at a level consistent with steady job growth and signaled a sharp rebound in nonfarm payrolls in November after the labor market was hit hard by Hurricanes Helene and Milton and strikes by factory workers at Boeing and another aerospace company.
NFP data is expected to show a gain of 200,000 jobs in November after adding just 12,000 in October, the lowest since December 2020, according to a Reuters poll.
Historically low layoffs have contributed much of the labor market strength. The Federal Reserve’s steep rate hikes in 2022 and 2023 to rein in inflation have dampened companies’ appetite for hiring.
The Fed’s Beige Book report on Wednesday described employment as “flat or slightly up” across the U.S. central bank’s districts in November. The report also said “hire activity was subdued as the jobless rate remained low and few companies reported increases in headcount,” adding that “layoffs were also reported to be low.”
The slow hiring has kept many jobless individuals on unemployment benefits rolls longer. The number of people receiving benefits after the first week of aid, a proxy for hiring, fell by 25,000 to a seasonally adjusted 1.871 million for the week ended Nov. 23, the claims report said.
While the data did not affect the November jobs report because it falls outside the survey period, the continued rise in extended claims raises the risk of a rise in the unemployment rate. The unemployment rate is expected to rise to 4.2% last month from 4.1% in October.
The Fed is widely expected to cut rates this month for the third time since it began its easing cycle in September. The central bank's policy rate is now in a range of 4.50%-4.75%, after rising by 525 basis points in 2022 and 2023.
The outlook for interest rates in 2025 remains uncertain amid threats of tariffs and promises of tax cuts from President-elect Donald Trump's new administration, which economists say could push up prices and add to government debt.
