Weekly jobless claims increase 13,000 to 196,000
Four-week moving average of claims falls 2,500 to 189,250
Continuing claims rise 38,000 to 1.688 million
By Lucia Mutikani
WASHINGTON, Feb 9 (Reuters) – The number of Americans filing new claims for unemployment benefits increased more than expected last week, but the underlying trend continued to point to a tight labor market.
The jobs market has remained resilient despite growing economic headwinds from the Federal Reserve’s interest rate increases.While labor market strength keeps the U.S. central policy on its monetary policy tightening path, it also suggests that a much anticipated recession is nowhere near.
“We would be crying wolf if we said we thought there was a recession signal in the weekly unemployment claims data this week,” said Christopher Rupkey, chief economist at FWDBONDS in New York.”Recession is not around the corner with layoffs this low, and the downturn, if it is coming at all, is months away.”
Initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 196,000 for the week ended Feb.4, the Labor Department said on Thursday. That was the first increase in claims since the second last week of December. Economists polled by Reuters had forecast 190,000 claims for the latest week.
The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, fell 2,500 to 189,250, the lowest level since last April.Unadjusted claims rose 9,628 to 234,654 last week.
There was a jump in claims in California as well as notable increases in Ohio and Illinois. Those rises offset decreases in Georgia, New Jersey and Texas.
Claims have remained low despite high-profile layoffs in the technology industry as well as the interest rate-sensitive finance and housing sectors.Walt Disney and Zoom Video Communications added to the growing list of companies laying off workers, announcing 7,000 and 1,300 jobs cuts, respectively, this week.
Economists say most of the companies, especially in the technology industry, overhired during the COVID-19 pandemic.They noted that small businesses continued to seek workers.
There is anecdotal evidence that companies are generally reluctant to lay off workers after experiencing difficulties recruiting during the pandemic.
Workers remain scarce in some industries.There were 1.9 job openings for every unemployed person in December, government data showed last week. According to an Institute for Supply Management survey last Friday, some services businesses in January reported they were “unable to hire qualified labor,” saying that “supply is thin.”
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STRONG JOBS MARKET
Economists speculated that severance packages were delaying the filing of unemployment benefits claims, while the abundance of vacancies made it easier for laid-off workers to find jobs.
“If the company offers severance, the claims are not counted until the severance expires,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.”But even so, the job market remains remarkably strong.”
Economists also believed that seasonal adjustment factors, EvDEn eVE NaKliYaT the model the government uses to strip out seasonal fluctuations from the data, were keeping claims lower.
The seasonal adjustment factors for 2023 will be updated at the end of March.Applying the average seasonal factors for the prior EVdeN eve naKliyAT two years with the same calendar configuration as 2023 would put claims at 210,000 in the latest week and a four-week average of 200,000, according to Conrad DeQuadros, senior economic advisor at Brean Capital.
“Nonetheless, this would still be a low reading on claims and indicate that either involuntary separations remain low and/ or those who lose their jobs are quickly re-employed elsewhere,” DeQuadros said.”There is no sign of easing of labor market tightness here.”
The claims report also showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 38,000 to 1.688 million during the week ending Jan. 28.
Lower layoffs have been a major evDEN eVe NAKliYAT contributor to strong job gains.The government reported last Friday that nonfarm payrolls surged by 517,000 jobs in January, the most in six months, after rising by 260,000 in December. The unemployment rate fell to more than a 53-1/2-year low of 3.4% from 3.5% in December.
Fed Chair Jerome Powell said on Tuesday that the central bank’s fight to tame inflation could last “quite a bit of time,” in a nod to January’s blowout job gains.Since March, the U.S. central bank has hiked its policy rate by 450 basis points from near zero to the 4.50%-4.75% range. (Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)