US weekly jobless claims are rising, the job market is still tight
WASHINGTON (Reuters) – The number of Americans filing new jobless claims rose more-than-expected last week, but remained at levels consistent with a tight labor market.
Initial jobless claims rose 13,000 to a seasonally adjusted 196,000 for the week ended February 4, the Labor Department said on Thursday. Economists polled by Reuters had forecast 190,000 applications last week.
Claims have remained low despite high-profile layoffs in the tech industry and in the interest-rate-sensitive financial and housing sectors. There is anecdotal evidence that companies are generally reluctant to lay off workers after struggling to recruit during the pandemic.
Labor shortages remain in some sectors. According to government data, there were 1.9 job openings for every unemployed person in December. According to a survey by the Institute for Supply Management last Friday, some service companies said in January they were “unable to hire skilled workers” and said “supply is low”.
Economists speculate that severance packages were delaying the filing of jobless claims, while the glut of job vacancies made it easier for laid-off workers to find new jobs. They also believed seasonal factors, the model the government uses to filter out seasonal variations from the data, kept claims lower.
“However, we expect the reported claims level to be revised upwards when the annual seasonal factor updates are released this spring,” said Lou Crandall, chief economist at Wrightson ICAP.
The claims report also showed that the number of people receiving benefits after an initial week of assistance, a proxy for hiring, rose by 38,000 to 1.688 million in the week ended Jan. 28.
Lower layoffs have been a major contributor to strong employment gains. The government reported last Friday that nonfarm payrolls rose by 517,000 in January, the most in six months, after rising by 260,000 in December. The unemployment rate fell to more than a 53-1/2 year low of 3.4% from 3.5% in December.
Federal Reserve Chair Jerome Powell said Tuesday that the Federal Reserve’s fight to tame inflation could take “quite a long time,” alluding to the skyrocketing job gains in January. Since March, the Fed has raised interest rates by 450 basis points from near zero to a range of 4.50% to 4.75%.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)