01:37 PM EST, 01/08/2025 (MT Newswires) -- Weekly applications for unemployment insurance in the US unexpectedly dropped last week, while continuing claims rose, government data showed Wednesday.

The seasonally adjusted number of initial claims decreased by 10,000 to 201,000 in the week ended Jan. 4, according to the Department of Labor. The consensus was for a 215,000 print in a survey of analysts compiled by Bloomberg. The previous week's reading was left unrevised at 211,000.

The four-week moving average came in at 213,000, falling by 10,250 from the previous week's unrevised average. Weekly unadjusted claims rose by 21,253 to 304,741.

For the week ended Dec. 28, seasonally adjusted continuing claims totaled 1.87 million, compared with the Bloomberg consensus of 1.86 million. Continuing claims increased by 33,000 from the prior week's level, which was revised down by 10,000. The four-week moving average came in at 1.87 million, decreasing by 3,000 from the prior week's downwardly revised average, according to the DOL.

"The data are encouraging, but we do not feel compelled to boost our forecast for Friday's (nonfarm payrolls) report, due to timing factors in the surveys, as well as the fact that claims measure only one side of the supply/demand coin," Jefferies US Economist Thomas Simons said in a Wednesday note to clients.

The Bureau of Labor Statistics is expected to report Friday that the US economy added 163,000 nonfarm jobs last month, which would mark a drop from the 227,000 gain posted for the month prior, according to a survey compiled by Bloomberg. Jefferies projects total payroll growth at 140,000 in December.

Last month, the Federal Reserve reduced its benchmark lending rate by 25 basis points and flagged fewer cuts ahead than projected in September. The Federal Open Market Committee's Summary of Economic Projections at the time showed that policymakers lowered their unemployment rate expectations for 2024 and 2025.

"Friday's employment report may show that the central tendency forecast for unemployment dipped a little bit too much, but we do not expect the alarm bells to ring at the Eccles Building any time soon," Simons said Wednesday, referring to the Fed's headquarters.

The largest decreases in initial jobless claims for the week ended Dec. 28 were in California, at 9,263, followed by Texas and Florida, according to DOL data. Michigan and New Jersey led the increases.