US jobless claims rise to two-month high as labour market cools
INITIAL applications for US unemployment benefits unexpectedly rose to a two-month high last week, suggesting some slowdown in the labour market.
Initial claims increased by 9,000 to 224,000 in the week ending Jan 27, according to Labor Department data released on Thursday (Feb 1). The median forecast in a Bloomberg survey of economists called for 212,000.
Continuing claims, a proxy for the number of people receiving unemployment benefits, rose to 1.9 million in the week ending Jan 20.
The US labour market has defied economists forecasts over the last year despite elevated interest rates, but there are signs of cooling.
Fewer people are quitting their jobs than at the peak of the pandemic recovery and recent high-profile job-cuts announcements from companies including US Parcel Service may be early signs that unemployment will pick up in coming months.
Weekly claims tend to be volatile. The four-week moving average, which helps smooth short-term fluctuations, increased to 207,750, marking the biggest increase since November.
The unadjusted data on initial claims, which doesn’t take into account seasonal influences, rose by 11,000 to about 261,000. California, New York and Oregon saw the largest gains.
US-based employers announced plans to cut over 82,300 cuts in last month, more than double the December figure, according to a report earlier Thursday from Challenger, Gray & Christmas. Meanwhile, hiring plans were the weakest on record for a January.
“The data continue to show that layoffs are not mounting,” Rubeela Farooqi, chief US economist at High Frequency Economics, said in a note. “For now, an adjustment in labour market conditions is coming from a slowing in hiring rather than a surge in firings, which is welcome news.”
SEE ALSO
The low level of jobless claims data may not be a reliable indicator of what is happening in the labour market due to pandemic related factors, according to Bloomberg Economics economists Anna Wong and Eliza Winger.
There’s a historically low share of unemployed Americans applying for benefits due to a lack of eligibility and the fact that the weekly payouts have not kept up with the pace of inflation, which may cause more people to seek part-time jobs rather than apply for benefits, Wong and Winger wrote in a recent note.
After Federal Reserve officials held interest rates steady on Wednesday, chair Jerome Powell called the labour market “strong” in a press conference, adding “it’s getting back into balance, and that’s what we want to see.”
The release of the government’s monthly jobs report on Friday will provide further insights on the labour market. Economists forecast US employers added 185,000 jobs in January. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
