US weekly jobless claims increase, labour market still tight
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THE number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at levels consistent with a tight labour market.
Initial claims for state unemployment benefits rose by 13,000 to a seasonally adjusted 196,000 for the week ended Feb 4, the Labor Department said on Thursday (Feb 9). Economists polled by Reuters had forecast 190,000 claims for the latest week.
Claims have remained low despite high-profile layoffs in the technology industry, as well as the interest rate-sensitive finance and housing sectors. 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 2022, 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 labour”, saying that “supply is thin”.
Economists speculate that severance packages were delaying the filing of unemployment benefits claims, while the abundance of job openings made it easier for laid-off workers to find new jobs. They also believed that seasonal factors, the model the government uses to strip out seasonal fluctuations from the data, were keeping claims lower.
“We do, however, expect the reported level of claims to be revised up when the annual seasonal factor revisions are published this spring,” said Lou Crandall, chief economist at Wrightson ICAP.
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The claims report also showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 38,000 to 1.7 million during the week ending Jan 28.
Lower layoffs have been a major contributor to strong job gains. The government reported last Friday that non-farm payrolls surged by 517,000 jobs in January, the most in six months, after rising 260,000 in December. The unemployment rate fell to more than a 53½ year low of 3.4 per cent from 3.5 per cent in December.
Federal Reserve chair Jerome Powell said on Tuesday that the US 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 Fed has hiked its policy rate by 450 basis points from near zero to a 4.50 per cent-to-4.75 per cent range. REUTERS
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