U.S. Unemployment Claims Hit 11-Month Low Amid Fed's Gradual Rate Cuts

The U.S. labor market shows stability as new unemployment claims fall to an 11-month low, despite slower hiring rates. The Federal Reserve is likely to maintain current interest rates amidst the cooling job market and persistently high inflation.

The number of Americans applying for unemployment benefits recently declined to its lowest point in 11 months, indicating a stable labor market, despite a slowdown in hiring. Laid-off workers are facing extended joblessness, but the dip in claims signals robustness in employment conditions.

A cooling labor market may prompt the Federal Reserve to keep interest rates steady in January, amidst ongoing high inflation. The Fed has projected a gradual pace of rate cuts after a shallow easing cycle began last year. Chief economist Carl Weinberg noted this allows more time for policy adjustments.

The Labor Department reported a drop in initial claims for state unemployment benefits by 10,000 to 201,000 for the first week of January. Though claims usually fluctuate year-end, the figures reflect a positive trend, but hiring remains sluggish, leading to drawn-out unemployment spells for some.

(With inputs from agencies.)