WASHINGTON (AP) — The number of Americans applying for unemployment benefits fell significantly last week, a sign that the labor market remains strong even as the Federal Reserve continues to raise interest rates in an effort to cool the economy and slow inflation.

Applications for jobless claims fell to 211,000 for the week ending Dec. 10, down by 20,000 from the previous week’s 231,000, the Labor Department reported Thursday. Jobless claims are seen as a proxy for layoffs, and last week’s level was the lowest in more than two months.

The four-week moving average of claims, which evens out some of the week-to-week volatility, fell by 3,000 to 227,250.

About 1.67 million people were receiving jobless aid the week that ended Dec. 3, up 1,000 from the week before.

American workers have extraordinary job security at the moment, despite an economy some see in danger of tipping into a recession due to the aggressive interest rate hikes by the Federal Reserve this year. The Fed has raised its benchmark interest rate seven times this year in an effort to slow the economy and bring down prices that are gobbling up Americans’ paychecks.

On Wednesday, the Fed raised its short-term lending rate by 0.5 percentage points, a smaller increase than the previous four increases of 0.75 percentage points. Its key rate now stands in a range of 4.25% to 4.5%, the highest in 15 years.

In somewhat of a surprise, Fed policymakers forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023. That suggests that the Fed is poised to raise its rate by an additional three-quarters of a point and leave it there through next year.

Fed officials have signaled that to slow inflation, the unemployment rate needs to be at least 4%. Currently, the unemployment rate is 3.7%, a couple of ticks above a half-century low. U.S. employers added 263,000 jobs last month. There are nearly two job openings for every unemployed American.

In its updated forecasts, the Fed’s policymakers predicted slower growth and higher unemployment for next year and 2024. The unemployment rate is envisioned to jump to 4.6% by the end of 2023, from 3.7% today. That would mark a significant increase in joblessness that typically would reflect a recession.

Many economists expect the U.S. to slip into a recession next year as the Fed’s rate hikes increase borrowing costs and slow economic activity.

The housing market has been hit the hardest as mortgage rates that have more than doubled from a year ago have pushed many would-be buyers out of the market. Sales of previously occupied homes have fallen for nine straight months.

The technology and real estate sectors have been outliers in an otherwise robust job market, with Facebook, Twitter, Amazon, DoorDash, BuzzFeed, Redfin and Compass all announcing significant layoffs in recent months.

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