US weekly jobless claims unexpectedly fall

WASHINGTON, Jan 2 (Reuters) - The number of Americans filing new applications for jobless benefits unexpectedly fell last week, pointing to low layoffs at the end of 2024, consistent with a healthy labor market.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 211,000 for the week ended Dec. 28, the Labor Department said on Thursday. Economists polled by Reuters had forecast 222,000 claims for the latest week.

Claims tend to be volatile around the end of the year. Through the volatility, however, they have remained consistent with a labor market that is steadily slowing at a pace that does not signal a deterioration in economic conditions.

The Federal Reserve last month delivered a third consecutive interest rate cut. However, it projected only two reductions in borrowing costs in 2025 compared to the four it had forecast in September, acknowledging the jobs market and economic resilience.

The labor market is being underpinned by very low levels of layoffs, but employers are hesitant to add more workers after a hiring spree amid recovery from the COVID-19 pandemic. As a result, some workers who have lost their jobs are experiencing long bouts of joblessness, with the median duration of unemployment approaching a three-year high in November.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 52,000 to a seasonally adjusted 1.844 million during the week ending Dec. 21, the claims report showed. Economists have attributed some of the continued elevation in the so-called continuing claims to difficulties stripping out seasonal fluctuations from the data.

They expect the unemployment rate to have held steady at 4.2% in December. (Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)