The number of Americans applying for unemployment benefits showed a slight increase last week according to The Labor Department. The tally rose by 2,000 up to 205,000 for the week ending Dec. 16, although this still represents historically low levels. The four-week average, which is less influenced by short-term fluctuations, saw an overall decrease of 1,500 to stand at 212,000. This low number of unemployment claims, a proxy for layoffs, has held steady despite interest rates designed to slow hiring and stabilize the economy.

According to data, 1.87 million Americans were collecting benefits as of the week ending Dec. 9. The Federal Reserve started increasing interest rates to battle the unexpected surge in inflation following the economic recovery from the Covid-19 recession of 2020. However, despite the regular rises in its benchmark rate, inflation has shown signs of a decrease. The rates remained consistent at the Fed’s last three sessions and there are now predictions of a cut three times in the coming year.

The rise in interest rates initially led to speculations of a slide into recession for the United States’ economy. However, the economy has demonstrated resilience. The unemployment rate has remained under 4% for an unbroken 22 months, the longest such stretch since the 1960s, indicating a healthy level of hiring.

The data continue to signal that layoffs remain low, commented Rubeela Farooqi, chief U.S economist at High Frequency Economics adding, However, demand for workers appears to be easing; job growth remains robust but has moderated… this should help rebalance the labor market and take pressure off wages and prices.

The parallel occurrence of slowing inflation and low rates of unemployment hints at the successful implementation of a soft landing by the Fed — carefully raising rates enough to curb inflation but avoiding a recession.