The number of new applications for unemployment benefits dropped by 16,000 to 225,000 last week, the Labor Department reported Thursday.
Falling jobless claims are a sign the economy is still adding jobs despite the Federal Reserve’s efforts to tighten monetary policy to slow economywide spending and bring down inflation.
This week’s jobless claims number is being closely watched as it is the last such report as the Federal Reserve votes on raising rates next week.
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For a long stretch toward the end of the summer, jobless claims defied expectations and remained low — even despite the Federal Reserve’s aggressive and historic rate hikes. Since the start of October, though, they have been above 210,000.
The Fed has been aggressively jacking up interest rates to tame inflation, although the trade-off is that rising interest rates slow demand and can result in a recession.
Earlier this month, the central bank conducted another huge three-quarters of a percentage point, or 75 basis points, rate increase. It was the fourth such increase in just five months — the largest increase in four decades.
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Next week, the Fed will once again vote on what degree to hike rates. Recent comments from Fed Chairman Jerome Powell and other officials indicated the central bank might dial back its aggressive hiking a bit and raise rates by 50 basis points rather than 75 basis points.
