WASHINGTON (Reuters)

The number of Americans filing new applications for unemployment benefits fell more than expected last week, indicating low layoffs despite scarce job opportunities for those unemployed.

Initial claims for state unemployment benefits
dropped 16,000 to a seasonally adjusted 207,000 for the week ending January 25, as reported by the Labor Department on Thursday. Economists polled by Reuters had predicted 220,000 claims for the latest week.

While claims remain at levels indicating a steady labor market, consumers’ optimism regarding job availability in case of layoffs is waning. A Conference Board survey this week showed that the percentage of consumers reporting jobs as “plentiful” fell to a four-month low in January, while the share viewing jobs as “hard-to-get” reached its highest since October.

Companies have reduced hiring in response to ongoing tight monetary policy and are waiting to evaluate the effects of President Donald Trump’s new administration policies, including tax cuts, tariffs, and deportations, on their hiring strategies.

Economists have labeled these policies as inflationary. The Federal Reserve announced on Wednesday that it will maintain its benchmark overnight interest rate in the 4.25%-4.50% range, having lowered it by 100 basis points since September when it began its policy easing cycle.

In its policy statement, the Fed omitted a reference to inflation having “made progress” towards its 2% goal.

Moreover, the number of people receiving benefits after the initial week of aid, a measure of hiring, decreased by 42,000 to a seasonally adjusted 1.858 million during the week ending January 18. This increase in continuing claims highlights diminishing job opportunities.

The continuing claims data covered the period during which the government surveyed households for January’s unemployment rate, which stood at 4.1% in December.