The labor market rebounded in the first week of December as the number of jobless claims plummetted.
The number of Americans applying for state unemployment benefits fell to 206,000. Economists had forecast around 225,000.
Jobless claims are a proxy for layoffs. They have been closely watched this year for signs that trade disputes could be costing American jobs. So far, however, there have been no signs that this is the case.
Initial jobless claims have been climbing higher from historically low levels for several weeks. The latest numbers market a turnaround of that trend or at least a pause, with the numbers dropping far below the basically unchanged forecast.
The December decline in claims suggests that the spike in claims in late-November may have been a statistical illusion rather than a sign of a slowdown. The reported numbers are “seasonally adjusted” each week to account for typical seasonal changes in hiring. The unusually early Thanksgiving holiday may have thrown off the adjustments, pushing reported claims higher.
The sharp drop in claims also suggests that the lower-than-expected job growth in November was not a signal of a cooling-off of hiring but an indication of the inability of businesses to find workers in a tight labor market. Nonfarm payrolls rose by 155,000 jobs in November, below expectations and below the prior month’s 237,000. The unemployment rate held steady at 3.7 percent, a very low level.
Claims hit 202,000 in September, which was the lowest level since December 1969.
Data for the prior week was revised to 231,000, 2,000 applications higher than previously reported.
Jobless claims can be volatile week to week. The four-week moving average of initial claims, considered a better measure of the labor market trends because it smooths out the week-to-week bumps, fell 3,750 to 224,750 last week.