Feb 2, 2023
US Unemployment Claims Drop for Fourth Time in Five Weeks
(Bloomberg) -- Applications for US unemployment benefits fell for the fourth time in five weeks, underscoring the broad resilience of the job market that threatens to keep inflation elevated.
Initial unemployment claims ticked down by 3,000 to 183,000 in the week ended Jan. 28, the lowest since April, Labor Department data showed Thursday. The median forecast in a Bloomberg survey of economists called for 195,000 applications.
Continuing claims, which include people who have already received unemployment benefits for a week or more, fell to 1.66 million in the week ended Jan. 21.
The labor market, while cooling at the margins, is still tight by many measures and remains one of the key hurdles in the Federal Reserve’s fight against inflation. Even though payrolls growth has slowed and companies in technology and banking have laid off staff in recent months, demand for workers still far exceeds supply, which could put upward pressure on wages and broader prices.
After the central bank slowed the pace of interest-rate hikes to a quarter point Wednesday, Chair Jerome Powell stressed that the Fed needs to see better balance in the labor market to curb inflation in services excluding housing and energy. He also acknowledged there’s been progress to ease price pressures without weakening the job market so far.
What Bloomberg Economics Says...
“Recent readings on claims have been distorted by extreme weather. Floods and heavy snowfall have had a significant impact on California’s economy, producing weekly volatility in claims figures. However, layoffs remain low generally.”
— Eliza Winger, economist
To read the full note, click here
The four-week moving average in initial claims, with smooths out some of the week-to-week volatility, dropped to 191,750, the lowest since May.
On an unadjusted basis, initial claims fell slightly to 224,356. They declined the most in Kentucky and California.
The data precedes Friday’s employment report, which is forecast to show hiring moderated in January but still grew at a robust pace, and that the unemployment rate remained near a five-decade low. Other data this week showed a softening in labor costs at the end of last year, while job openings unexpectedly jumped.
A separate report Thursday showed US worker productivity rose in the fourth quarter by the most in a year and labor costs decelerated, a development that, if sustained, could help further ease inflationary pressures.
--With assistance from Jordan Yadoo.
(Adds Bloomberg Economics comment)
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