US labor market remains tight as unemployment rate hits 10-month high | Business and economic news

The number of Americans filing new jobless claims rose moderately last week, suggesting the labor market remains tight and strong despite growing recession fears as the U.S. Federal Reserve States make efforts to reduce demand.

Although the weekly jobless claims report from the U.S. Department of Labor on Thursday showed an increase in the unemployment rate, aka continued claims, rose to its highest level yet. for 10 months at the end of November, economists warn against reading too much into the move as the data is volatile this time of year.

The tightening and resilience of the labor market led the US central bank to keep raising interest rates for a while.

“It is too early to interpret continued higher requirements as a signal of an easing labor market,” said Isfar Munir, an economist at Citigroup in New York. “The holiday period is generally not attractive for workers to start new jobs, plus many businesses are temporarily closed during the holiday period.”

Initial state jobless claims rose 4,000 to a seasonally adjusted 230,000 for the week ending Dec. 3. Last week’s gain was in line with economists’ expectations. The claim is far below the 270,000 threshold, which economists say will raise a red flag for the labor market.

Claims tend to fluctuate at the start of the holiday season when companies are temporarily closed or hiring slow, which can make it difficult to get a clear grasp of the labor market. They spiked to three-month highs a week before the Thanksgiving holiday, only to have roughly pared off the next week’s spike.

However, there has been an increase in layoffs in the tech sector, with Twitter, Amazon and metaFacebook’s parent company, announced thousands of job cuts in November.

Unadjusted claims rose 87,113 to 286,436 last week, driven by large increases in California, New York, Georgia and Texas. There were also notable increases in Illinois, Pennsylvania, Indiana, Ohio, New Jersey and Washington state.

The number of people receiving benefits after the first week of aid, a proxy for hiring, increased by 62,000 to 1.671 million in the week ended Nov. 26, claims data shows. That was the highest level in consecutive requests since February.

The unemployment rate for those receiving unemployment benefits rose to 1.2%, the highest since March, from 1.1% in the previous week. That shows that the unemployed will take longer to find a job.

Stocks on Wall Street traded higher. The dollar fell against a basket of currencies. US Treasury yields rose.

‘Moderate easing’

“This could be a sign that labor market tightening has eased a bit and if it continues, it will,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York. would be a cautionary note on the outlook.”

But DeQuados also cautioned that the data is difficult to adjust for the season around Thanksgiving.

“We should wait and see if ongoing claims continue to rise or if the insured rate declines slightly in the first week of December as it did in 2020 and 2021,” he said. “.

Other economists also took a cautious view, arguing that adjusting the data for seasonal fluctuations with an alternative model showed a smaller increase than reported by the government.

“This can be particularly important given the ongoing claims data that shows a clear upward trend in filings in recent months in official figures but is less noticeable using a number of seasonal adjustment instead,” said Daniel Silver, an economist at JPMorgan. York.

Despite the recent steady increase in the number of claims for benefits, there has been no significant change in the dynamics of the labor market.

The government reported last week that non-farm payrolls added 263,000 jobs in November. Economists say tech companies are scaling appropriately after hiring too much during the pandemic. during the COVID-19 pandemic, while noting that small companies are still in dire need of workers.

Businesses are also hoarding labor after difficulties in finding workers after the pandemic. There were 1.7 job openings for every unemployed person in October.

The Fed wants to slow down the labor market to cool down inflation and has increase its policy rate this year from near zero to a range of 3.75 percent to 4 percent in the fastest rate hike cycle since the 1980s.

Economists expect the Fed to continue tightening monetary policy and raise the policy rate to a higher than recently expected level of 4.6%, a level that could hold for some time. time.

Initial and subsequent claims are expected to gradually increase, largely due to layoffs of office workers.

“There is likely to be more layoffs in white-collar positions due to labor supply constraints,” said Nancy Vanden Houten, lead US economist at Oxford Economics in New York. which is less constrained for white-collar positions”. “Businesses are hoarding low-skilled workers because they are hard to find and retain.”


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