The US labor market shows signs of divergence, with the high unemployment rate attracting attention

The US labor market has recently sent mixed signals. According to data released by the US Department of Labor on Wednesday, initial unemployment claims decreased last week, falling seasonally adjusted from an expected 2.24 million to 2.14 million, a weekly decline of 100,000. This result contrasts with market expectations, as economists surveyed by Reuters had forecasted higher numbers.

However, behind this seemingly "positive" data lies a deeper labor market dilemma. The Department of Labor also reported that during the week ending December 13, the number of people continuing to receive unemployment benefits increased by 380,000, reaching a total of 1.923 million after adjustment. This contrasting data indicates that while new claims have decreased, the number of unemployed individuals is expanding—a typical "imbalance in inflow and outflow."

The pressure of the unemployment rate persists. In November, the unemployment rate rose to 4.6%, the highest in four years. Although part of this increase is due to technical factors (related to government shutdowns), it also reflects a genuine cooling of the labor market. Consumer confidence data further confirms this—according to the latest survey from the Conference Board, consumer optimism about the current job market has fallen to its lowest level since early 2021.

Economists generally describe the current US labor market as "neither hiring nor firing." While the overall US economy remains resilient, hiring has shown a clear wait-and-see attitude. The volatility in data before seasonal adjustments has increased market uncertainty about the unemployment rate trend, especially during the holiday season when such fluctuations become more frequent.

Overall, although the decline in weekly unemployment claims provides a short-term positive signal, the ongoing increase in the number of unemployed people and the persistently high unemployment rate suggest that the US labor market may face more pressure in the future. Whether the unemployment rate can peak in December remains to be seen.