WASHINGTON: The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to underlying labor market strength despite a recent spike in layoffs.
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 218,000 for the week ended Feb. 3, the Labor Department said on Thursday. Economists polled by Reuters had forecast 220,000 claims for the latest week.
Claims are little changed compared to the same period last year, in spite of the recent high-profile layoffs, many of them in the technology and media industries.
Employers are generally wary of sending workers home following difficulties finding labor during and after the COVID-19 pandemic. Economists also point to rising worker productivity, marked by growth in excess of a 3% annualized pace for three straight quarters, and easing labor costs as other factors encouraging companies to retain their workforces.
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The government reported last week that nonfarm payrolls increased by 353,000 jobs in January. The unemployment rate was unchanged at 3.7%. Sustained labor market strength has forced financial markets to dial back expectations of the first interest rate cut from the Federal Reserve to May from March.
U.S. central bank officials signaled on Wednesday that they were in no rush to lower borrowing costs until they were confident inflation was headed down to the Fed’s 2% target. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 23,000 to 1.871 million during the week ending Jan. 27, the claims report showed.
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