- Weekly jobless claims increased from 21,000 to 211,000
- The four-week average of claims rises from 4,000 to 197,000
- Continuing claims jump from 69,000 to 1.718 million
WASHINGTON (Reuters) – The number of Americans filing new applications for unemployment benefits rose by the most in five months last week, but the underlying trend remained consistent with a tight labor market.
Part of the larger-than-expected increase in claims reported by the Labor Department on Thursday reflects an increase in claims in New York state, which some economists attributed to the mid-winter school holidays from February 20-24. There has also been a sharp rise in filings in California.
“Even after factoring in the recent increase, jobless claims are exceptionally low by historical standards, underlining just how tight labor market conditions are,” said Michael Pearce, chief US economist at Oxford Economics in New York.
“This is likely an early sign that the spike in announced layoffs is beginning to translate into some job losses, but not all announced layoffs translate into job cuts.”
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Initial claims for state unemployment benefits increased by 21,000 to a seasonally adjusted 211,000 for the week ending March 4th. It was the biggest increase since October and lifted claims to a two-month high. However, claims remained well below the 300,000 level associated with a recession.
Economists polled by Reuters had expected 195,000 claims in the last week. The four-week moving average of new claims, which is a better measure of labor market trends because it smooths out weekly volatility, rose from 4,000 to 197,000 last week.
Claims have remained below 200,000 for seven consecutive weeks, indicating that high-profile job cuts in the technology sector have not had a material impact on the labor market.
Economists have previously argued that seasonal adjustment factors, the model the government uses to exclude seasonal fluctuations from data, can stop claims.
Seasonal adjusters will be updated for 2023 at the end of March. Goldman Sachs believes the remaining seasonality accounts for about half of last week’s claims rise.
“Seasonal adjustment issues have exerted an increasing amount of downward pressure on initial claims over the past few months, and that pressure will begin to ease in a few weeks, although annual reviews of seasonal factors at the beginning of April may eliminate the seasonal distortions.” Goldman Sachs said in a note.
Unadjusted claims rose last week from 35,357 to 237,513. They were boosted by a jump of 16,363 in filings in New York and an increase of 10,489 in California. There were also notable increases in applications in Kentucky, Oregon and Ohio. But claims in Rhode Island and Massachusetts have dropped dramatically.
According to Lou Crandall, chief economist at Wrightson ICAP, the increase in New York State claims was “an expected response to the previous week’s mid-winter school holidays, and will likely be reflected in next week’s report.” Crandall saw the rise in California filings as “likely to be more steady,” and expected total claims to ease to the 195,000-200,000 range when this week’s data is released next Thursday.
Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. US Treasury bond prices were mixed.
Scarcity of skilled workers
Data on Wednesday showed that there were 1.9 jobs available for every unemployed person in January. The Fed’s “Beige Book” report, released on Wednesday, also described the job market as remaining “strong” in February, noted “sparse reports of layoffs” and that “finding workers with the required skills or experience continues to be a challenge.” challenging.”
With labor market tightening, strong inflation readings, and consumer spending solid in January, Federal Reserve Chairman Jerome Powell told lawmakers this week that the US central bank will probably need to raise interest rates more than expected.
Financial markets priced in a 50 basis point rate hike at the Fed’s March 21-22 policy meeting, according to CME Group’s FedWatch tool.
The Fed has raised its policy rate by 450 basis points since last March from a near zero level to the current range of 4.50%-4.75%.
The claims report also showed that the number of people receiving benefits after an initial week from Help, a proxy for employment, increased from 69,000 to 1.718 million during the week ending Feb. 25. Continuing claims remain low, indicating that some laid-off workers can easily find new work.
The claims data has no impact on the February employment report, which is due to be released on Friday, because it falls outside the survey period.
According to a Reuters survey of economists, nonfarm payrolls probably increased by 205K in February after jumping by 517K in January. The unemployment rate is expected to remain unchanged at a 53-1/2 year low of 3.4%.
However, the job market is slowing down on the periphery. A report from overseas recruiting firm Challenger, Gray & Christmas on Thursday showed that job cuts announced by US employers fell 24% to 77,770 in February. However, planned layoffs were 410% higher than the same period last year. It was also the highest February total since 2009.
The job cuts have been centered in the technology industry, which accounted for 28% of the layoffs announced last month. Retailers and finance companies are also cutting staff.
“With 1.9 job vacancies per job seeker, it appears that fired workers are quickly finding rehire, which could make unemployment dynamics very different from historical experience if layoffs continue in the Height”. York.
(Reporting by Lucia Moticani) Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao
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