In Washington, weekly U.S. applications for unemployment benefits fell to 199,000 for the week ending Dec. 27, down 16,000 from the prior week’s 215,000, the Labor Department reported on Wednesday. Analysts surveyed by FactSet had expected about 208,000 new claims. The report was released a day early because of the New Year’s Day holiday, and officials cautioned that holiday-shortened weeks can distort filings. Overall, layoffs remain at comparatively low levels even as broader indicators point to a cooling labor market.
Key Takeaways
- Initial claims dropped 16,000 to 199,000 for the week ending Dec. 27, versus 215,000 the previous week and FactSet’s 208,000 forecast.
- The Labor Department released the weekly report a day early because of the New Year’s Day holiday; holiday-shortened weeks can delay filings.
- The four-week moving average edged up by 1,750 to about 218,750, a smoothing measure that reduces weekly volatility.
- Continuing claims (people already collecting benefits) for the week ending Dec. 20 fell by 47,000 to about 1.87 million.
- Recent payroll data showed a gain of 64,000 jobs in November and a 105,000 loss in October; revisions trimmed August and September payrolls by 33,000.
- Federal worker payrolls registered a large drop (162,000) around the fiscal-year-end period, a factor in the October employment decline.
- Policymakers at the Federal Reserve have recently cut the benchmark rate and signaled concern the labor market may be weaker than headline figures suggest.
Background
Weekly initial unemployment claims are closely watched as a near–real-time proxy for layoffs and hiring disruptions. The Labor Department compiles the data from state unemployment offices; single-week readings can swing because of reporting lags, seasonal adjustments and calendar effects such as holidays. Analysts emphasize the four-week average to reduce week-to-week noise, while continuing claims measure the flow of people remaining on benefit rolls.
Throughout 2025 the U.S. labor market has shown signs of deceleration. Since March, monthly job creation has averaged about 35,000, a marked slowdown from the roughly 71,000 average in the year that ended in March. That slowdown has coexisted with elevated rates set earlier by the Federal Reserve to combat pandemic-era inflation, and with policy uncertainty including trade measures that some economists say have weighed on business hiring plans.
Main Event
The Labor Department’s weekly initial-claims release for the Dec. 27 week reported 199,000 new filings, a 16,000 decline from the previous week’s 215,000. FactSet analysts had expected 208,000 claims, so the outturn was slightly stronger than consensus. The report was issued a day early because the normal Friday publication fell adjacent to the New Year’s Day holiday, which can shift filing behavior and state reporting schedules.
The four-week moving average — designed to dampen volatility — rose modestly to roughly 218,750, reflecting a mixed short-term picture. Continuing claims, which count people who remain on unemployment rolls, fell by about 47,000 to 1.87 million for the week ending Dec. 20, pointing to some decrease in ongoing benefit reliance in that snapshot.
Separately, monthly payrolls data released earlier this month showed the economy added 64,000 jobs in November but lost 105,000 in October. Labor Department revisions also removed about 33,000 jobs from August and September totals, altering the recent pace of hiring. A large drop in federal payrolls — about 162,000 around the fiscal-year cutoff — was a key contributor to the October decline in official payroll employment.
Analysis & Implications
At face value, initial claims below 200,000 signal that large-scale employer-led layoffs are not widespread. Historically, readings near or under 200,000 have coincided with relatively healthy labor markets. However, multiple indicators paint a more nuanced picture: payroll growth has slowed sharply since spring, and the unemployment rate rose to 4.6% in the latest report, the highest since 2021.
The Federal Reserve has responded to softer labor-market signals by trimming its benchmark lending rate in recent meetings — three consecutive quarter-point cuts, by the Fed’s account — while warning that headline employment figures could be revised downward. Fed Chair Jerome Powell noted the possibility of sizable downward revisions in recent months’ jobs data, which, if realized, would imply job shedding rather than the modest net hiring suggested by initial reports.
Corporate announcements of targeted layoffs at firms such as UPS, General Motors, Amazon and Verizon underscore unevenness across sectors; some large employers are actively trimming payrolls while other firms continue hiring. For policymakers, the interplay between slowing job creation, modestly elevated unemployment, and persistent wage pressures complicates decisions on whether to pause, ease, or reverse monetary easing.
Comparison & Data
| Metric | Value |
|---|---|
| Initial claims (week ending Dec. 27) | 199,000 |
| Initial claims (previous week) | 215,000 |
| Four-week moving average | ~218,750 |
| Continuing claims (week ending Dec. 20) | ~1.87 million |
| Payrolls: November jobs | +64,000 |
| Payrolls: October jobs | -105,000 |
| Federal payroll drop reported | 162,000 |
| Revisions to Aug–Sept payrolls | -33,000 |
The table highlights how the weekly claims snapshot fits into broader monthly payroll patterns and revisions. While claims provide a timely read on layoffs, monthly payroll reports and Bureau of Labor Statistics revisions can materially change the interpreted trend.
Reactions & Quotes
Officials and market participants reacted to the numbers with cautious interpretation, noting calendar effects and the ongoing slowdown in hiring.
“Holiday-shortened weeks can compress reporting and delay some filings, which makes single-week movements harder to interpret.”
U.S. Labor Department (weekly claims release)
This caveat from the Labor Department accompanied the data release and is routinely cited when year-end holidays fall inside a reporting week.
“Recent job figures could be revised lower by as much as 60,000, which would change the recent hiring picture substantially.”
Federal Reserve Chair Jerome Powell
Chair Powell has signaled that downward revisions remain a key risk, a point policymakers use when assessing the appropriate path for interest rates.
“While headline layoffs stay low, sectoral cuts at large employers point to pockets of weakness.”
Market analysts at FactSet
Analysts emphasize that aggregate measures can mask industry- and firm-level dynamics affecting workers differently across the economy.
Unconfirmed
- Attributions linking the 162,000 federal-payroll drop directly to actions by a private individual or a private company’s pressure on government hiring are reported in some summaries but lack direct confirmation in official Labor Department releases.
- Precise timing and motivation for individual federal-worker departures around the fiscal-year cutoff vary by agency and are subject to internal personnel data not fully disclosed in the public payroll aggregates.
Bottom Line
The week’s initial-claims tally — 199,000 — suggests layoffs remain limited at a headline level, but the broader labor-market picture is more mixed. Monthly payrolls, downward revisions, and a rising unemployment rate to 4.6% indicate that job growth has slowed substantially since earlier in the year.
Policymakers and market participants should watch upcoming payroll revisions, continued claims trends, and sector-specific hiring announcements. Those indicators will help determine whether recent softness represents a temporary lull amplified by calendar effects or the start of a more persistent labor-market weakening that would shape monetary and fiscal policy decisions in the months ahead.