Unemployment Benefits in the U.S.

WASHINGTON (Reuters) – The number of Americans filing new applications for unemployment benefits increased moderately last week, suggesting that the labor market continued to steadily cool.

Initial claims for state unemployment benefits rose by 9,000 to a seasonally adjusted 224,000 for the week ended Nov. 30, according to the Labor Department. Economists polled by Reuters had forecast 215,000 claims for the latest week.

Claims are at levels consistent with steady job growth and have signaled a sharp rebound in nonfarm payrolls in November after the labor market was distorted by Hurricanes Helene and Milton and strikes by factory workers at Boeing and another aerospace company.

Nonfarm payrolls likely increased by 200,000 jobs in November after rising by 12,000 in October, the lowest number since December 2020, according to a Reuters survey.

Historically low layoffs account for most of the labor market's strength. Significant interest rate hikes from the Federal Reserve in 2022 and 2023 to tame inflation have left companies with little appetite to hire more workers.

The Fed's Beige Book report on Wednesday described employment as "flat or up only slightly" across U.S. central bank districts in November. It noted that "hiring activity was subdued as worker turnover remained low and few firms reported increasing their headcount," adding that "the level of layoffs was also reportedly low."

Sluggish hiring is keeping many who have lost their jobs longer on unemployment rolls. The number of people receiving benefits after an initial week of aid, a proxy for hiring, fell by 25,000 to a seasonally adjusted 1.871 million during the week ending Nov. 23, according to the claims report.

While the data have no bearing on November's employment report as it falls outside the survey period, the persistent elevation in so-called continuing claims poses an upside risk to the unemployment rate. The jobless rate is forecasted to rise to 4.2% last month from 4.1% in October.

The Fed is widely expected to cut rates this month for the third time since launching its easing cycle in September. The central bank's policy rate is currently in the 4.50%-4.75% range, having been hiked by 525 basis points in 2022 and 2023.

The rate outlook for 2025 is uncertain amid threats of tariffs and tax cut promises from President-elect Donald Trump's incoming administration, which economists have said would raise prices and increase government borrowing.