WASHINGTON (Reuters) – The number of Americans filing new applications for unemployment benefits rose marginally last week, suggesting that solid job growth likely continued in January.
Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 223,000 for the week ended Jan. 18, the Labor Department said on Thursday. Economists polled by Reuters had forecast 220,000 claims for the latest week.
Freezing temperatures that have gripped large parts of the country and fires in Los Angeles could boost claims in the coming weeks. Aside from the weather distortions, the labor market continues to chug along, keeping the economic expansion on track. Last week’s claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of January’s employment report.
Nonfarm payrolls increased by 256,000 jobs in December. The economy added 2.2 million jobs last year, averaging 186,000 positions per month, down from 3.0 million in 2023.
Labor market sturdiness was among factors that prompted the Federal Reserve to dial back its projected interest rate cuts for this year to only two from the four it estimated in September when it launched its policy easing cycle.
An immigration crackdown by President Donald Trump’s new administration as well as plans for tax cuts and broad tariffs, which economists have warned are inflationary, also added to caution among U.S. central bank officials on the course of monetary policy. Mass deportations and restrictions to legal immigration could hamper the labor market, economists said.
No rate cut is expected at the Fed’s policy meeting next week. The Fed has cut its benchmark overnight interest rate by 100 basis points to the current 4.25%-4.50% range since September. The policy rate was hiked by 5.25 percentage points 2022 and 2023.
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, could offer more clues on the health of the labor market in January.
The so-called continuing claims rose 46,000 to a seasonally adjusted 1.899 million during the week ending Jan. 11, the claims report showed.