The number of Americans applying for unemployment checks dropped last week to the lowest level since March 2024, suggesting that most US workers continue to enjoy unusually high job security.

Jobless claims dropped by 9,000 to 211,000 last week, the US Labor Department reported. The four-week average of claims, which strips out week-to-week ups and downs, fell by 3,500 to 223,250.

The overall number receiving unemployment benefits fell by 52,000 to 1.84 million, the lowest since September. However, analysts caution that seasonal adjustments around the holidays can throw off the numbers.

US job market has cooled considerably 

Despite this, the US job market has cooled considerably from the red-hot hiring days of 2021-2023 when the economy was bouncing back from COVID-19 lockdowns. Through November, employers added an average of 180,000 jobs a month in 2024, down from 251,000 in 2023, 377,000 in 2022 and a record 604,000 in 2021. 

When the Labor Department releases hiring numbers for December on January 10, it is expected to show that employers added 160,000 jobs last month. The weekly jobless claims numbers are a proxy for layoffs, and those have remained below pre-pandemic levels. 

The unemployment rate is at a modest 4.2 per cent, though that is up from a half-century low of 3.4 per cent reached in 2023. To fight inflation that hit four-decade highs two and a half years ago, the Federal Reserve raised its benchmark interest rates 11 times in 2022 and 2023. 

This has shown success with inflation coming down from 9.1 per cent in mid-2022 to 2.7 per cent in November 2024, allowing the Fed to start cutting rates. But progress on inflation has stalled in recent months, and year-over-year consumer price increases are stuck above the Fed’s two per cent target.