Continuing applications for U.S. jobless benefits fell by the most since July in a holiday week after climbing for the past two months.
Recurring jobless claims, a proxy for the number of people continuously receiving unemployment benefits, decreased by 64,000 to 1.86 million in the week ended Nov. 25.
That marked only the second drop since early September and followed a surge in the prior week.
The jobless claims data can be choppy from week to week, especially around the holiday season.
The four-week moving average of continuing claims, which smooths out some of that volatility, is running at the highest level in two years.
Despite the decline, continuing claims are still elevated amid growing evidence of a cooling labor market.
While job creation remains mostly healthy, employers are increasingly hitting the brakes on hiring, unemployment is rising and wage gains are losing steam.
Initial claims ticked up to 220,000 in the week ended Dec. 2, according to Labor Department data out Thursday.
That was in line with estimates in a Bloomberg survey of economists.
The data precedes the government’s monthly jobs report, which is forecast to show a pickup in hiring in November and the unemployment rate holding at 3.9%.
Those figures, along with next week’s inflation report, will probably do little to change expectations for the Federal Reserve to hold interest rates steady on Dec. 13.
Officials are looking for a cooling in the labor market, ideally through less demand for workers rather than outright job losses.
So far, that’s largely been working: Vacancies have retreated from a peak of 12 million last year and the unemployment rate has stayed historically low, though it’s climbed somewhat in recent months.
In another sign of a cooling labor market, the executive coaching firm Challenger, Gray & Christmas Inc. said U.S.-based employers announced 45,510 job cuts in November, which was lower than the same month a year ago but a 24% increase from October.
Seasonal hiring is also at its lowest level for this point in the year in a decade, according to a separate report.
“The job market is loosening, and employers are not as quick to hire,” Senior Vice President Andrew Challenger said in a statement.
“The labor market appears to be stabilizing with a more normal churn, though we expect to continue to see layoffs going into the new year.”
On an unadjusted basis, initial claims jumped by the most since early 2022, led by populous states like California, New York and Texas.