The US labor market remains "stagnant" despite short-term signs of recovery, with the December unemployment rate still under pressure.

Signs of conflict are emerging in the US labor market. While initial weekly unemployment claims last week showed some improvement, the overall labor economic context is sinking into a state that experts call “no hiring, no firing”—a rare but concerning condition.

The published data is “deceptive”

According to the US Department of Labor’s announcement on Wednesday, for the week ending December 20, seasonally adjusted unemployment claims dropped to 214,000, below the forecast of 224,000 by economists polled by Reuters. On the surface, this figure suggests the labor market remains resilient. However, this volatility largely stems from difficulties in seasonal adjustments around the holiday period.

Warnings from continued job demand

Behind these positive numbers lies a gloomier reality. The number of people continuing to receive unemployment benefits increased by 38,000, reaching 1.923 million in the week ending December 13—after seasonal adjustments. This aligns with recent data indicating consumer sentiment about the labor market has deteriorated.

The Conference Board announced on Tuesday that workers’ outlook on job opportunities has fallen to its lowest level since early 2021. The November unemployment rate surged to 4.6%—the highest in four years. Although part of this is due to technical adjustments related to government operations, the trend cannot be ignored.

Strong purchasing power economy, but “deadlocked” labor market

The current contradiction is that the US economy still maintains significant recovery potential, while unemployment rates and hiring demand are at a standstill. According to analysts, this may be a sign that companies are becoming more cautious about hiring decisions amid economic uncertainty.