WASHINGTON, Feb 2 (Reuters) – The number of Americans filing new claims for jobless benefits fell to a nine-month low last week as the job market remained volatile despite rising borrowing costs. up and the growing fear of a recession this year.
A surprise drop in weekly jobless claims reported by the Labor Department on Thursday raised cautious optimism that the economy could slow down the recession or have a shallower and shorter recession. Federal Reserve Chairman Jerome Powell told reporters on Wednesday that “the economy can return to 2% inflation without a big recession or a big increase in unemployment.”
“A few days soon economists will withdraw the calls for a recession in 2023 as the labor market refuses to survive the lowest unemployment rate in decades ,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
Initial claims for state jobless benefits fell 3,000 to a seasonally adjusted 183,000 for the week ended Jan. 28, the lowest level since April 2022. It was the third straight weekly decline. Economists interviewed by Reuters had predicted 200,000 for the latest week.
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Unauthorized claims fell by 872 to 224,356 last week. There were notable decreases in applications in Kentucky, California and Ohio, which slowed increases in Georgia and New York.
Complaints are low this year, consistent with a steady labor market. The government reported on Wednesday that there were 11 million job openings at the end of December, with 1.9 job openings for every unemployed person.
“The labor market has not responded well to a rapid increase in interest rates,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York.
Outside of the tech industry and interest-sensitive areas like housing and finance, employers are reluctant to lay off workers after struggling to find work during the pandemic, and also because and they are optimistic that the economic situation will improve later this year.
An Institute for Supply Report on Wednesday said that manufacturers “show that they will not reduce the number of points because they are good about the second half of the year.”
Businesses on Wall Street are overpriced. The dollar rose against a basket of currencies. The value of the US Treasury fell.
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The US central bank on Wednesday raised its policy rate by 25 basis points to 4.50%-4.75%, and promised a “continuing increase” in lending.
The statement showed the number of people receiving benefits after the first week of aid, the agent for hiring, fell 11,000 to 1.655 million in the week ending in Jan. call continues to say.
The announcement data is unrelated to the January jobs report, which is scheduled for release on Friday, as it coincides with the survey period. According to a Reuters poll of economists, non-farm payrolls may have increased by 185,000 jobs last month.
The economy created 223,000 jobs in December. The unemployment rate is seen rising to 3.6% from a more than 50-year low of 3.5% in December.
A series of layoffs in the technology sector fueled job cuts in January. A separate report on Thursday from global exporters Challenger, Gray & Christmas showed a 136% drop in US jobs to 102,943. That was the highest January total since 2009.
The technology sector accounted for 41% of job cuts, with 41,829 layoffs. Retailers announced 13,000 job cuts, while financial institutions plan to lay off 10,603 workers.
Daniel Silver, an economist at JPMorgan in New York, said, “It’s hard to tell the seemingly different information from the unemployment data and the Challenger project is reducing the data.” “One possible explanation for the recent discrepancy is that people are being laid off, but they are not filing for unemployment insurance. This may be because people are be able to find a new job more easily or because the termination payment delays eligibility for unemployment benefits.”
Despite the tight labor market, wages are falling and may continue to do so as the third report from the Department of Labor shows that workers are productive and -increased at 3.0% per year in the fourth quarter, the fastest in a year, when it increased at a 1.4% pace. in the third quarter.
Production fell at a rate of 1.5% from a year ago and will drop to 1.3% in 2022. But that is largely due to the recession caused by the COVID-19 pandemic. Production was up 5.1% from the fourth quarter of 2019.
As a result, unit wages – the cost of labor per unit of production – increased at a rate of 1.1%. That was the smallest gain since the first quarter of 2021 and followed a 2.0% growth trend in the third quarter. Although unit labor costs rose at a rate of 4.5% from a year ago, they were below the peak rate of 7.0% in the 12 months to the second quarter of 2022.
Paul Ashworth, chief North American economist at Capital Economics in Toronto, said: “The upshot is that, even without a rise in the unemployment rate and with job vacancies shrinking, the labor market is no longer looking like a source. of rising pressure.” .
Statement by Lucia Mutikani; Editing by Andrea Ricci
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