The variety of Americans filing latest unemployment claims unexpectedly fell last week, pointing to a different month of solid job growth and continued labor market tensions, despite efforts by the Federal Reserve to chill demand for employees.
Initial claims for state unemployment advantages fell by 15,000 to a seasonally adjusted 190,000 in the week ended Jan. 14 from 205,000 the week before, the Labor Department said Thursday. Economists polled by Reuters had forecast 214,000 claims last week.
A part of the third consecutive weekly decline in claims likely reflected the ongoing challenges of adjusting data to seasonal fluctuations early in the yr.
Nonetheless, due to seasonal volatility, claims have remained consistent with a tight labor market, at the same time as layoffs accelerated in tech and interest rate-sensitive sectors reminiscent of finance and housing.
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Microsoft said Wednesday it could cut 10,000 jobs, joining rival Amazon, which this month began notifying employees of 18,000 job cuts. Economists have warned against seeing tech layoffs as a sign of worsening labor market conditions, arguing that these firms were the right size after overstaffing during the COVID-19 pandemic.
“The tech sector is just getting back to where it was in 2020 or 2021, which I do not think is a bad situation,” said John Blevins, guest lecturer at the SC Johnson College of Business at Cornell. “It’s still a huge workforce. Those individuals who get laid off from these big tech firms will get latest jobs almost immediately.”
Outside the tech industry, economists say firms are generally reluctant to send employees home after struggling to search out workforce during the pandemic. They expect firms to chop jobs before resorting to layoffs.
Indeed, the Federal Reserve’s Beige Book on Wednesday reported that “many firms were hesitant to put off employees at the same time as demand for their goods and services declined and planned to scale back staff through layoffs if vital.”
The claims data covered the period when the government surveyed firms for the non-farm payroll component of its January employment report.
The claims fell between the December and January study weeks. The economy added 223,000 jobs in January.
More light on January’s employment growth shall be shed by next week’s data on the number of individuals receiving advantages after the first week of job substitute assistance. In the week ending January 7, so-called ongoing claims rose by 17,000 to 1.647 million, in keeping with a damages report.