The number of Americans applying for unemployment benefits fell sharply last week, a sign that U.S. job market remains resilient despite higher interest rates. The Labor Department reported Wednesday that jobless claims dropped by 24,000 to 209,000. The previous week’s total — 233,000 — had been the highest since August. The four-week moving average of claims, which smooths out week-to-week volatility, fell by 750 to 220,000.
Quick Read
- Drop in Unemployment Claims: The number of Americans applying for unemployment benefits fell sharply last week, with jobless claims dropping by 24,000 to 209,000.
- Comparison to Previous Week: The previous week’s claims were at 233,000, the highest since August.
- Four-Week Moving Average: The four-week moving average of claims, which reduces weekly volatility, also decreased by 750 to 220,000.
- Low Layoffs Indicator: These applications are considered a proxy for layoffs and are currently extraordinarily low by historical standards, indicating strong job security.
- Overall Unemployment Benefits: Currently, 1.84 million Americans are receiving unemployment benefits, a decrease of 22,000 from the week before.
- Federal Reserve’s Interest Rate Hikes: The Federal Reserve has raised its benchmark interest rate 11 times since March 2022 to combat inflation.
- Resilient Job Market: Despite these rate hikes, the job market and economic growth have remained strong, avoiding a predicted recession.
- Hiring Trends: Hiring has slowed compared to 2021 and 2022 but remains solid, averaging 239,000 monthly hires in 2023, although it has dipped below 200,000 in three of the last five months.
- Reduction in Job Openings: Employers are posting fewer job openings, indicating some softening in labor demand.
- Economic Outlook: Chief U.S. economist Rubeela Farooqi anticipates some weakening in labor demand due to the effects of restrictive monetary policy.
- Inflation Rate Decline: Year-over-year inflation has decreased from 9.1% in June 2022 to 3.2% recently, though it’s still above the Fed’s 2% target.
- Soft Landing Possibility: The combination of a slowing but stable job market and decreasing inflation rates raises hopes that the Federal Reserve can achieve a “soft landing,” slowing the economy sufficiently to control inflation without causing a recession.
The Associated Press has the story:
US Jobless claims drop by 24K to 209K, a sign of labor market resiliency
Newslooks- WASHINGTON (AP)
The number of Americans applying for unemployment benefits fell sharply last week, a sign that U.S. job market remains resilient despite higher interest rates.
The Labor Department reported Wednesday that jobless claims dropped by 24,000 to 209,000. The previous week’s total — 233,000 — had been the highest since August. The four-week moving average of claims, which smooths out week-to-week volatility, fell by 750 to 220,000.
The applications are viewed as a proxy for layoffs. They remain extraordinarily low by historical standards, signalling that most Americans enjoy unusual job security.
Overall, 1.84 million Americans were receiving unemployment benefits the week that ended Nov. 11, down by 22,000 from the week before.
The Federal Reserve has raised its benchmark interest rate 11 times since March 2022 to slow the economy and rein in inflation that hit a four-decade high last year. The job market and economic growth remained surprisingly resilient, defying predictions that the economy would slip into a recession this year.
But hiring has slowed from the breakneck pace of 2021 and 2022 when the economy roared back unexpectedly from the COVID-19 recession. Employers added a record 606,000 jobs a month in 2021 and nearly 400,000 last year. So far in 2023, monthly hiring has averaged a still-solid 239,000, but it’s come in below 200,000 in three of the last five months.
Employers are also posting fewer job openings.
“But job growth remains strong, the unemployment rate remains historically low, and businesses have yet to start reducing their workforce in a significant way,″ said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “We expect some softening in labor demand going forward as the effects of restrictive monetary policy spread more broadly through the economy,″
At the same time, inflation has decelerated markedly. In June 2022, consumer prices were up 9.1% from a year earlier. Last month, year-over-year inflation was down to 3.2%, though it remained above the Fed’s 2% target.
The combination of a slowing but durable job market and tumbling inflation rates has raised hopes that the Fed can manage a so-called soft landing — slowing economic activity enough to control inflation without tipping the United States into a recession.
