The number of Americans applying for unemployment benefits fell last week as the labor market continues to show resilience despite elevated interest rates.

Jobless claims fell to 202,000 for the week ending Dec. 30, down by 18,000 from the previous week, the Labor Department reported today. The four-week average of claims, which evens out some of the week-to-week volatility, fell by 4,750 to 207,750.

Overall, 1.86 million Americans were collecting jobless benefits during the week that ended Dec. 23, a decrease of 31,000 from the previous week and the fewest in two months.

Weekly unemployment claims are a proxy for layoffs. They have remained at extraordinarily low levels in the face of high interest rates.

In an effort to extinguish the four-decade high inflation that took hold after an unusually strong economic rebound from the COVID-19 recession of 2020, the Federal Reserve raised its benchmark rate 11 times since March of 2022.

Inflation has eased considerably during the past year, but remains slightly above the Fed’s 2% target. The Fed has left rates alone at its last three meetings and is now signaling that it could cut rates three times next year.

When the Fed started raising rates, it was widely predicted that the U.S. economy would slide into recession. But the economy and the job market remained surprisingly resilient. The unemployment rate has been below 4% for 22 straight months, the longest such streak since the 1960s.

The number of job openings has fallen, but remain at historically healthy levels. On Wednesday, the government reported that America’s employers posted 8.8 million job openings in November, down slightly from October and the fewest since March 2021. However, demand for workers remains strong by historical standards.

The combination of decelerating inflation and low unemployment has raised hopes that the Fed is managing a so-called soft landing: raising rates just enough to bring down prices without causing a recession.