The U.S. Labor Department reported a rise in new jobless claims, exceeding economists’ expectations last week. Despite this increase, the overall level remains consistent with a tight labor market.
The number of state unemployment benefits rose by 13,000 to 196,000 for the week ending on February 4th. This is higher than the 190,000 claims predicted by economists surveyed by Reuters.
Despite recent high-profile layoffs in the tech, finance, and housing sectors, jobless claims have remained low. Companies appear to be reluctant to lay off workers after struggling to recruit during the pandemic.
The scarcity of workers in certain industries is evident. In December, there were 1.9 job openings for every unemployed person. A recent survey by the Institute for Supply Management showed that some services businesses in January reported difficulty hiring qualified labor, citing a thin supply.
Economists believe that severance packages and the abundance of job openings have contributed to the delay in filing unemployment claims. They also expect seasonal factors to impact the data, with claims being revised upwards in the spring.
“We expect the reported level of claims to be revised up when the annual seasonal factor revisions are published this spring,” says Lou Crandall, Chief Economist at Wrightson ICAP.
The number of people receiving benefits after an initial week of aid, which serves as a proxy for hiring, rose by 38,000 to 1.688 million in the week ending January 28th.
Lower layoffs have significantly contributed to robust job gains. The government reported 517,000 new nonfarm payroll jobs in January, the most in six months, following a rise of 260,000 in December. The unemployment rate dropped to 3.4%, the lowest in over 53 years, from 3.5% in December.
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Federal Reserve Chair Jerome Powell acknowledged that the U.S. central bank’s efforts to control inflation could take “quite a bit of time” in light of January’s strong job gains. Since March, the Fed has increased its policy rate by 450 basis points, from near zero to a range of 4.50% to 4.75%.
The U.S. jobless claims and unemployment rate have been an important barometer of the nation’s economic health for decades. The earlier data shows that the unemployment rate for September to November 2022 increased by 0.2 percentage points to 3.7%, while the number of payroll employees increased by 28,000.
Despite this increase, the U.S. unemployment rate in 2022 was still lower than the previous year, with a decline of 2.59%. Over the past several decades, the U.S. unemployment rate has fluctuated, with an average of 5.73% from 1948 to 2023, reaching an all-time high of 14.70% in April of 2020 and a record low of 2.50% in May of 1953.
These figures highlight the impact of economic conditions on the job market and the well-being of American workers.