Fewer Americans filed for unemployment benefits last week, with layoffs still running low even as other government data suggests hiring has lost momentum. The U.S. Department of Labor said initial applications for the week ending Dec. 27 fell by 16,000 to 199,000, down from 215,000 the week before. The Labor Department released the report a day early because of New Year’s Day, and analysts said the holiday-shortened week can distort the timing of filings.
The Labor Department noted that applications for jobless aid are often used as a proxy for layoffs because they can function as a near-real-time indicator of the job market’s health. In this release, the week’s total landed below the level that analysts surveyed by FactSet had forecast—208,000 new applications. The Labor Department also reported that the previous week, ending Dec. 20, saw the total number of Americans filing for jobless benefits fall by 47,000 to 1.87 million.
Even with last week’s decline in filings, the Labor Department said the four-week average of claims increased by 1,750 to 218,7500, a measure intended to smooth week-to-week volatility. The Labor Department attributed the holiday effect to the shorter time period, saying that some people who have lost jobs may delay filing claims during holiday-shortened weeks.
Recent government data described by the Labor Department’s broader employment reporting has pointed to a deterioration in hiring momentum over the prior months. The government reported earlier this month that the U.S. gained 64,000 jobs in November but lost 105,000 in October, pushing the unemployment rate up to 4.6% last month, the highest since 2021. The same reporting said the October job losses were linked to a 162,000 drop in federal workers, many of whom resigned at the end of fiscal year 2025 on Sept. 30 under cutbacks described as stemming from billionaire Elon Musk’s purge of U.S. government payrolls.
That reporting also said revisions by the Labor Department reduced the prior payroll counts by 33,000 jobs across August and September. It described a broader labor market where job creation has slowed since March, averaging 35,000 a month versus 71,000 in the year ended in March. It also described uncertainty around President Donald Trump’s tariffs and the lingering effects of high interest rates set by the Fed in 2022 and 2023 to contain inflation.
The Fed’s recent rate moves have been tied directly to concerns about the labor market. The Federal Reserve trimmed its benchmark lending rate by a quarter-point, its third straight cut, earlier in December, and Fed Chair Jerome Powell said the committee reduced borrowing costs out of concern that the job market is even weaker than it appears. Powell also said recent job figures could be revised lower by as much as 60,000, which would imply employers have been shedding an average of about 25,000 jobs a month since the spring.
In parallel, some companies have announced job cuts, including UPS, General Motors, Amazon and Verizon. The latest jobless-claims reading arrives as officials monitor whether layoffs remain contained or begin to rise heading into the new year.