- Weekly unemployment claims fall from 2,000 to 190,000
- Recurring claims down from 5,000 to 1,655,000
- Fourth Quarter Labor Costs Revised Higher
WASHINGTON (Reuters) – The number of new applicants for unemployment benefits fell again last week, suggesting continued strength in the labor market and pushing the Federal Reserve to raise more interest rates. Financial markets are becoming more concerned that it will continue for a long time.
Those concerns were further heightened by another report from the Labor Department on Thursday showing labor costs rose much more rapidly in the fourth quarter than previously estimated. Despite heightened risks of recession, the labor market remains tight, keeping inflation high through solid wage growth.
Christopher Rupkey said: “The labor market has shown minimal job cuts and no new signs of deterioration despite news of layoffs at major tech companies in the past few months, and is expected to continue on rising interest rates. It will strengthen Fed officials’ resolve to slow economic demand.” Chief Economist at FWDBONDS in New York.
Initial claims for state unemployment benefits fell from 2,000 to a seasonally adjusted 190,000 in the week ended Feb. 25, according to the Labor Department. It was the seventh week in a row that claims were below 200,000. Economists polled by Reuters had forecast 195,000 claims in the recent week.
Show 2 more stories
Unreconciled claims fell from 9,297 to 201,710 last week. The decline was led by California and Kentucky. Insurance claims decreased significantly in Michigan, Ohio and Texas. Massachusetts and Rhode Island reported significant increases in claims.
Economists and policy makers say these firms employed too many workers during the COVID-19 pandemic and were not representative of the labor market, mostly in the technology sector. There is no indication yet that the current job cuts have had a material impact on the labor market. overall economy.
Economists also speculate that severance packages are preventing some furloughed workers, most of whom are highly paid, from filing claims. He had 1.9 job openings per unemployed person in December, and those who have lost their jobs can easily find work.
Economists say the seasonality factor, a model governments use to remove seasonal variations from data, may also be keeping bills low. Seasonally adjusted coefficients for 2023 will be updated at the end of March.
But even using alternative seasonal adjustments, economists say the labor market is still tight. Employers generally appear reluctant to let workers go as they have become harder to find during the pandemic.
A survey conducted Wednesday by the Supply Management Institute found respondents’ business sentiment “still favors trying to hire rather than lowering hiring levels.”
Wall Street stocks were mostly trading lower. Dollar rose against a basket of currencies. US Treasury prices fell.
The resilience of the labor market and stubbornly high inflation make it more likely that the Fed will raise rates not twice this year, but at least three more. The US Central Bank has raised its policy rate by 450 basis points since March last year, from near-zero levels to its current range of 4.50% to 4.75%.
Inflation may remain high. Unit labor costs (the price of labor per unit of production) increased at an annualized rate of 3.2% in the last quarter, according to his second report from the Labor Department. This is an upward revision from his 1.1% pace reported last month. Labor costs accelerated at a rate of 6.9% for him in the third quarter, and posted significant gains in his two previous quarters.
That jumped 6.5% in 2022 from a reported 5.7% last month. Economists estimate that labor costs are on pace to match underlying inflation slowing to his 4% by the end of the year, doubling the Fed’s 2% inflation target.
The Core Personal Consumption Expenditure Price Index, one of the indicators the Fed tracks for monetary policy, rose 4.7% in January.
Hourly wages increased by 4.7% in 2022. He has averaged 5.0% over the past five years, well above the 3% some policymakers see as meeting their inflation target.
Rising labor costs imply non-farm productivity, which measures output per hour per worker, grew only 1.7% last quarter, down from a previously reported pace of 3.0% was given.
“The revised data suggest that the underlying inflation problem in the United States is more serious than previously thought,” said Michael Pearce, chief U.S. economist at Oxford Economics in New York. helps explain the persistence of sticky service price inflation, largely reflecting domestically driven wage costs.”
After the first week of assistance, the number of people receiving benefits fell from 5,000 to 1.655 million in the week ending 18 February, according to claims reports. Unemployment rate in February.
Recurring claims decreased slightly between the January and February survey periods. The unemployment rate in January was 3.4% for him, the lowest in over 53 years. Economists expect his February employment growth to be strong, but the pace has likely slowed from his massive 517,000 increase in January.
“There is no doubt that the job market is very strong,” said Stuart Hoffman, senior economic adviser at PNC Financial in Pittsburgh, Pennsylvania. “We expect payroll jobs to increase by nearly 215,000 in February.”
Reported by Lucia Mutikani.Editing: Chiju Nomiyama, Paul Simao
Our criteria: Thomson Reuters Trust Principles.