WASHINGTON: The number of Americans filing new claims for unemployment benefits fell last week to the lowest level since late 2022, suggesting job growth likely remained solid in January.
Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 187,000 for the week ended Jan. 13, the lowest level since September 2022, the Labor Department said on Thursday. Economists polled by Reuters had forecast 207,000 claims for the latest week.
Claims data tend to be volatile at the turn of the year. The labor market is gradually easing, with employers generally reluctant to lay off workers following difficulties finding labor during and after the COVID-19 pandemic.
The Fed’s Beige Book report on Wednesday showed that “nearly all districts cited one or more signs of a cooling labor market,” including larger applicant pools, lower turnover rates and abating wage pressures.
But pockets of worker shortages remain, with the report also showing that “two districts continued to note a tight labor market, and several described hiring challenges for firms seeking specialty skills.”
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The claims data could prompt financial markets to further scale back bets of an interest rate cut in March.
The report followed on the heels of strong retail sales growth in December as well as comments by Fed Governor Christopher Waller on Tuesday that the economy was “doing well,” which he said was giving the U.S. central bank “the flexibility to move carefully and methodically” on monetary policy.
The Fed has hiked its policy rate by 525 basis points to the current 5.25%-5.50% range since March 2022.
The claims data covered the period during which the government surveyed employers for the nonfarm payrolls component of January’s employment report. Claims fell between the December and January survey period. The economy added 216,000 jobs in December compared to 173,000 in November.
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the state of the labor market in January. The so-called continuing claims decreased 26,000 to 1.806 million during the week ending Jan. 6, the claims report showed.
Continuing claims have mostly increased since mid-September, blamed largely on difficulties adjusting the data for seasonal fluctuations after an unprecedented surge in filings for benefits early in the pandemic.
Economists expect that most the increase will be revised away when the government updates the seasonal factors, the model it uses to strip out seasonal fluctuations from the data.
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