Weekly unemployment claims a total of 198,000, less than expected and around 52 years low

The first applications for unemployment insurance fell last week and remained close to the lowest level in more than 50 years, the Ministry of Labor reported on Thursday.

Unemployment claims for the week ending December 25 were 198,000, less than the Dow Jones forecast of 205,000 and a decrease of 8,000 from the previous period.

Adjusting for weekly volatility, the four-week moving average for claims reached 199,250, the lowest level since October 25, 1[ads1]969.

Continued claims, where the data goes one week behind the headline figure, fell by 140,000 to 1.72 million, the lowest level since March 7, 2020, just before the Covid pandemic declaration.

The figures reflect an increasingly tight labor market and suggest that the Federal Reserve is withdrawing from some of the historically accommodative policies it put in place during the crisis. National unemployment has fallen to 4.2%, far from the peak of 14.8% in April 2020.

Despite the downward trend in initial requirements, the sum of those who received benefits under all programs increased by almost 40,000 to 2.18 million, according to data up to 11 December.

Some of the decline in claims has come from the end of the benefits through programs created during the pandemic that provided improved and expanded payments. Nevertheless, the total performance is far from where it was a year ago when 20.5 million were on the various programs.

The labor market has also seen a record pace of people quitting their jobs, many for better opportunities elsewhere as average hourly earnings rise in an inflationary environment that the United States has not seen in decades.

The Fed has responded to inflation by increasing the pace of reducing its monthly bond purchases. That program is expected to be completed in a few months, and markets expect the central bank to start raising interest rates in March 2022.