- Weekly jobless claims increase from 21,000 to 211,000
- Four-week average claims increase by 4,000 to 197,000
- Continuing claims jump 69,000 to 1.718 million
WASHINGTON, March 9 (Reuters) – The number of Americans filing new claims for unemployment benefits rose 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 a surge in claims in New York state, which some economists have attributed to a mid-winter school break from May 20 to February 24. There has also been a sharp increase in filings in California.
“Even after taking into account the latest increase, unemployment insurance claims are exceptionally low by historical standards, underscoring how tight labor market conditions are still,” said Michael Pearce, economist Chief American at Oxford Economics in New York.
“It’s possible this is an early sign that the surge in announced layoffs is starting to translate into job losses, but not all announced layoffs translate into job cuts.”
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Initial claims for state unemployment benefits rose 21,000 to a seasonally adjusted 211,000 for the week ended March 4. It was the biggest increase since October and took claims to a two-month high. Still, claims remained well below the 300,000 level, which is associated with a recession.
Economists polled by Reuters had forecast 195,000 claims for the past week. The four-week moving average of new claims, a better measure of labor market trends because it smooths out weekly fluctuations, climbed from 4,000 to 197,000 last week.
Claims had remained below 200,000 for seven consecutive weeks, indicating that the high-profile job cuts in the tech sector had not had a significant impact on the labor market.
Economists have previously argued that seasonal adjustment factors, the model used by the government to eliminate seasonal fluctuations in data, could dampen claims.
The seasonal adjustment factors for 2023 will be updated at the end of March. Goldman Sachs estimated that residual seasonality accounted for about half of last week’s rise in claims.
“Seasonal adjustment issues have put increasing downward pressure on initial claims over the past few months, and that pressure will begin to reverse within weeks, although annual revisions to seasonal factors in early April could potentially eliminate seasonality distortions,” Goldman Sachs said in a note.
Unadjusted claims jumped from 35,357 to 237,513 last week. They were boosted by a jump of 16,363 filings in New York and an increase of 10,489 in California. There were also notable increases in claims in Kentucky, Oregon and Ohio. But claims in Rhode Island and Massachusetts have dropped significantly.
According to Lou Crandall, chief economist at Wrightson ICAP, the increase in New York State claims was “a predictable response to the mid-winter school holidays of the previous week and will likely be reversed in next week’s report. “. Crandall viewed the increase in California filings as “likely to be more persistent” and expected overall claims to fall back into the 195,000 to 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 prices were mixed.
FEW SKILLED WORKERS
Wednesday’s data showed there were 1.9 job openings for every unemployed person in January. The Fed’s “Beige Book” report, also released Wednesday, described the labor market as remaining “solid” in February, and noted “sparse reports of layoffs” and that “finding workers with the right skills or desired experience remained difficult”.
With a still-tight labor market, high inflation numbers and robust consumer spending in January, Fed Chairman Jerome Powell told lawmakers this week that the U.S. central bank is likely to raise interest rates. interest more than expected.
Financial markets have forecast a 50 basis point rate hike at the March 21-22 Fed policy meeting, according to CME Group’s FedWatch tool.
The Fed has raised its key rate by 450 basis points since last March, taking it from near zero to the current range of 4.50% to 4.75%.
The number of people receiving benefits after a first week of help, a proxy indicator of employment, rose by 69,000 to 1.718 million in the week ending February 25, the claims report also showed. . So-called continuing claims remain low, suggesting that some laid-off workers could easily find new jobs.
The claims data has no bearing on the February jobs report, due out on Friday, as it falls outside the survey period.
Nonfarm payrolls likely rose by 205,000 jobs in February after jumping 517,000 in January, according to a Reuters survey of economists. The unemployment rate is expected to remain unchanged at more than a 53.5-year low of 3.4%.
However, the labor market is cooling at the margins. A report by global outplacement firm Challenger, Gray & Christmas showed Thursday that job cuts announced by US-based employers fell 24% to 77,770 in February. Planned layoffs, however, were 410% higher than for the same period last year. It is also the highest February total since 2009.
The job cuts have been concentrated in the tech industry, which accounted for 28% of the layoffs announced last month. Retailers and financial companies are also reducing their workforces.
“With 1.9 vacancies per job seeker, laid-off workers appear to be finding new jobs quickly, which could make unemployment dynamics quite different from historical experience in the event that layoffs continue to rise,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York. York.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao
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