Washington: 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. The four-week moving average of claims, which is considered a better measure of labor market trends because it strips out week-to-week volatility, fell by 2,500 to 189,250, the lowest since last April is level. Unadjusted claims increased by 9,628 to 234,654 last week.
Claims boomed in California as well as Ohio and Illinois, with significant increases. Those increases decreased 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 (DIS.N) and Zoom Video Communications (ZM.O) added to the growing list of companies laying off workers, announcing 7,000 and 1,300 jobs cuts, respectively, this week.
Economists say most companies, especially in the technology industry, over hired 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 employees after facing difficulties in hiring 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.”
U.S. stocks opened higher. The dollar fell against a basket of currencies. U.S. Treasury prices rose.