Another week, another rock-bottom read on US jobless claims.

If you’re looking anxiously for signs that the labor market is cooling, you won’t find them in initial claims, which fell again last week to just 183,000.

That was well below consensus and the lowest since April. The four-week moving average sat at just 191,750, the lowest since early May. Continuing claims for the week of January 21 were likewise below estimates.

The numbers underscored what scarcely needed additional emphasis: The Fed might’ve made progress when it comes to deflating speculative assets, cooling demand and curbing housing market excesses, but the labor market remains bulletproof.

This shouldn’t come as a surprise. As Wednesday’s JOLTS figures made clear, demand for workers still far outstrips the supply of qualified, available labor. Layoffs in the tech sector make for flashy headlines, but they apparently don’t move any needles at the macro level.

Jerome Powell is acutely aware of the extent to which this threatens the Fed’s efforts to curb the worst inflation in a generation, but there’s not much he can do about it. If 450bps of rate hikes in less than a year barely makes a dent, then it’s reasonable to assume that labor market frictions will need to work themselves out.

There were more than 11 million job openings across the US economy on the last business day of December. How high do you have to hike rates to squeeze those out? How much demand destruction does it take to render 11 million open positions superfluous? I don’t know. Neither does anyone else, and it’s highly likely that between structural factors, pandemic dynamics and poor matching efficiency, a labor shortage in some form will persist come hell or high rates.

On the other hand, unit labor costs rose far less than expected in Q4, separate data released Thursday showed. The 1.1% increase was easily below the 1.5% consensus. The prior two quarters were revised lower.

That’s more incremental evidence to suggest that despite the acute (and possibly endemic) labor shortage, the risk of a wage-spiral is perhaps abating. Q4 ECI data released earlier this week told a similar story.

Productivity rose 3% in Q4, ahead of estimates. Q3’s small increase was revised to show a larger gain. Recall that in Q1 of 2022, productivity plunged by the most in almost 80 years. Q2’s drop was smaller, but still counted among the largest in modern US history.

In Q3, productivity as measured from the same quarter of the prior year fell a third time. It was the first instance of labor productivity in the US falling for three consecutive quarters since 1982. That streak extended to four last quarter.

As a reminder, it’s the juxtaposition between falling productivity and surging wages that pushes unit labor costs higher. So, the increase in productivity measured on a quarterly SAAR basis (and the upward revised for Q3) helped lower unit labor costs, which is a constructive development for the Fed.

Ultimately, though, friction in the labor market will surely keep wage growth elevated for the foreseeable future, which means concerns about services sector inflation won’t abate anytime soon.