US weekly jobless claims decline more than anticipated
February 8, 2024 – 6:44 AM PST
WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits fell slightly more than expected last week, pointing to underlying labor market strength despite a recent surge in announced layoffs, mostly in the technology industry.
The report from the Labor Department on Thursday also showed unemployment rolls shrinking a bit in late January after swelling to a two-month high earlier. Labor market resilience is underpinning the economy and the latest claims readings suggested that the strong economic momentum from the fourth quarter spillover into the new year.
“The basic message from today’s report is not only are there not enough job losses to point to a recession, there are no significant job losses to see at all,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
“The belt-tightening layoffs and cost-cutting talked about in many company earnings reports is not showing up in the weekly unemployment claims statistics.”
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 218,000 for the week ended Feb. 3. The decline reversed the bulk of the prior week’s increase, which had lifted claims to just over a two-month high.
Economists polled by Reuters had forecast 220,000 claims for the latest week. Claims are little changed compared to the same period last year. Unadjusted claims dropped 31,192 to 232,727 last week amid sharp declines in filings in California, Ohio, Oregon, New York and Pennsylvania. The decreases in these starts partially unwound surges in the week ending Jan. 27.
Applications in Oregon had soared in the prior week, attributed to layoffs in the construction and healthcare and social assistance industries. The jump in New York was blamed on layoffs in the transportation and warehousing, construction as well as healthcare and social assistance industries.
There has been a spat of high-profile planned layoffs, many of them in the technology and media industries.
But employers are generally wary of sending workers home following difficulties finding labor during and after the COVID-19 pandemic. Economists also point to rising worker productivity, marked by growth in excess of a 3% annualized pace for three straight quarters, and easing labor costs as other factors encouraging companies to retain their workforces.
The government reported last week that nonfarm payrolls increased by 353,000 jobs in January. The unemployment rate was unchanged at 3.7%. Sustained labor market strength has forced financial markets to dial back expectations of the first interest rate cut from the Federal Reserve to May from March.
U.S. central bank officials signaled on Wednesday that they were in no rush to lower borrowing costs until they were confident inflation was headed down to the Fed’s 2% target. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 23,000 to 1.871 million during the week ending Jan. 27, the claims report showed.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
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What does the decrease in jobless claims indicate about the current state of the labor market in the US?
Title: Jobless Claims in the US Drop, Indicating Resilience in Labor Market
Date: February 8, 2024
Introduction:
The latest report from the Labor Department reveals a positive development in the US labor market, with a decrease in jobless claims. Despite recent layoffs in the technology industry, the drop in unemployment claims suggests underlying strength in the labor market. This article examines the implications of this trend and highlights the factors contributing to the resilience of the US economy.
Labor Market Strength:
The decrease in new claims for unemployment benefits demonstrates the underlying strength of the labor market in the US. Despite concerns about job losses in the technology industry, the latest data suggests that the economy continues to show strong momentum from the previous quarter, spilling over into the new year. Notably, there is no significant evidence of job losses to suggest a recession.
Unemployment Rolls:
In addition to the decrease in jobless claims, the report also indicates a shrinking of unemployment rolls in late January. After reaching a two-month high, the decline in unemployment rolls reflects the resilience of the labor market. These trends are essential for sustaining economic growth in the US.
Industry-Specific Layoffs:
While there have been high-profile layoffs in sectors like technology and media, employers remain cautious about sending workers home due to difficulties in finding labor during and after the COVID-19 pandemic. Factors such as rising worker productivity and easing labor costs encourage companies to retain their workforces.
Economic Forecasts:
The sustained strength of the labor market has led to a revision in financial market expectations regarding the timing of the first interest rate cut by the Federal Reserve. With nonfarm payrolls increasing by 353,000 jobs in January and the unemployment rate stable at 3.7%, financial markets now anticipate a rate cut in May rather than March. Central bank officials have also indicated that they will lower borrowing costs once they are confident inflation will hit the targeted 2% level.
Conclusion:
The recent drop in jobless claims attests to the resilience of the labor market in the US. Despite announcements of layoffs in specific industries, the overall economy shows signs of strength. The sustained momentum from the previous quarter, coupled with high worker productivity and easing labor costs, encourages companies to retain their workforce. This positive development bodes well for the US economy’s future stability and growth prospects.
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