US weekly jobless claims fall, third-quarter GDP growth revised higher

WASHINGTON: The number of Americans filing new applications for jobless benefits fell more than expected last week, reversing the prior week’s jump and suggesting that a gradual labour market slowdown remained in place.

Other data on Thursday showed the economy grew faster than previously estimated in the third quarter, driven by robust consumer spending. The upbeat report came a day after the Federal Reserve delivered a third consecutive interest rate cut, but projected only two rate reductions in 2025, citing the economy›s continued resilience and still-elevated inflation.

Fed Chair Jerome Powell told reporters on Wednesday that the “downside risks of the labor market do appear to have diminished,” adding that “the US economy has just been remarkable, I feel very good about where the economy is.”

“The economy is set to end 2024 on a solid note, which is fortunate since we’ll have to contend with heightened policy uncertainty and possibly greater challenges in 2025,” said Oren Klachkin, financial markets economist at Nationwide.

Initial claims for state unemployment benefits dropped 22,000 to a seasonally adjusted 220,000 for the week ended December 14, the Labor Department said. Economists polled by Reuters had forecast 230,000 claims for the latest week. They had jumped 17,000 in the prior week. Claims have entered a period of volatility, which could see large swings in the data.

Unadjusted claims plunged 57,932 to 251,527 last week, pulled down by large decreases in New York, California, Georgia, Illinois, Michigan, Minnesota, Texas, Washington state, Wisconsin, New Jersey and Ohio.

A range of indicators, including job openings, suggests that conditions are much looser than they were before the Covid-19 pandemic, but the labour market is slowing in an orderly fashion.

A jump in the unemployment rate to 4.3 per cent in July from 3.7 per cent at the start of the year saw the US central bank kicking off its policy easing cycle with an unusually large half-percentage-point interest rate cut in September. The Fed on Wednesday cut its benchmark overnight interest rate by 25 basis points to the 4.25-4.5 per cent range.

In September, the Fed had pencilled in four quarter-point rate cuts in 2025. The shallower rate cut path for next year in the latest projections also reflected uncertainty over policies from President-elect Donald Trump’s incoming administration, including tariffs on imported goods, tax cuts and mass deportations of undocumented immigrants, which economists have warned would be inflationary.

The Fed hiked its policy rate by 5.25 percentage points between March 2022 and July 2023 to tame inflation.The dollar was steady against a basket of currencies. US Treasury yields rose.

ROBUST CONSUMER SPENDING

The claims data covered the week during which the government surveyed businesses for the nonfarm payrolls component of December›s employment report. Claims rose marginally between the November and December survey periods.