U. S. Unemployment claims increase despite strong Macro data
2023.02.09 13:06
U. S. Unemployment claims increase despite strong Macro data
By Ray Johnson
Budrigannews.com – Last week, the number of Americans submitting new claims for unemployment benefits increased more than anticipated, but they continued to do so at levels that indicate a tight labor market.
The Labor Department reported on Thursday that initial claims for state unemployment benefits increased by 13,000 to a seasonally adjusted 196,000 for the week ending February 4. Reuters polled economists and predicted 190,000 claims for the most recent week.
Despite prominent layoffs in the technology, housing, and finance industries that are sensitive to interest rates, claims have remained low. Anecdotal evidence suggests that after having difficulty recruiting during the pandemic, businesses are generally reluctant to lay off employees.
In some sectors, there are still few workers. According to government statistics from last week, there were 1.9 job openings for every unemployed person in December. A survey conducted by the Institute for Supply Management on Friday revealed that in January, some service providers stated that they were “unable to hire qualified labor” and that “supply is thin.”
Economists speculate that the abundance of job openings made it easier for laid-off workers to find new employment, while severance packages were putting off filing claims for unemployment benefits. Additionally, they believed that claims were remaining low due to seasonal factors, as this is the model the government employs to remove seasonal fluctuations from the data.
Lou Crandall, chief economist at Wrightson ICAP (LON:), stated, “We do, however, expect the reported level of claims to be revised up when the annual seasonal factor revisions are published this spring.”
The claims report also revealed that, as a proxy for hiring, the number of people receiving benefits after an initial week of assistance rose by 38,000 to 1.688 million in the week ending January 28.
Strong job gains have been largely attributed to lower layoffs. After increasing by 260,000 in December, nonfarm payrolls increased by 517,000 in January, the most in six months, as reported by the government on Friday. From 3.5% in December, the unemployment rate dropped to 3.4%, a level that was lower than it had been in 53-1/2 years.
In reference to the record-breaking job gains in January, Federal Reserve Chair Jerome Powell stated on Tuesday that the United States central bank’s struggle to control inflation could last “quite a bit of time.” The Federal Reserve has increased its policy rate from close to zero to a range of 4.50 percent to4.75% since March.
