By Economic Report: U.S. jobless claims drop to nine-month low of 183,000 even as more firms announce layoffs
The numbers: The number of Americans who applied for unemployment benefits at the end of January fell to a nine-month low of 183,000, signaling that the U.S. labor market is still going strong despite more reports of corporate layoffs.
New applications slipped from 186,000 in the previous week, the government said Thursday.
Economists polled by the Wall Street Journal had forecast that new claims would total 195,000 in the seven days ending Jan 28. The figures are seasonally adjusted.
The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse.
New unemployment filings are still historically low even though more large companies such as Amazon.com Inc.
AMZN,
+4.88%
and Goldman Sachs Group Inc.
GS,
+0.91%
have announced layoffs in recent months.
Key details: Twenty-seven of the 53 U.S. states and territories that report jobless claims showed an increase last week, most of them small. The rest reported declines.
New claims have zigzagged since Thanksgiving, ranging from a high of 241,000 to a low of 183,000, but they show little sign of a steep erosion in a strong labor market.
The number of people already collecting unemployment benefits, meanwhile, fell by 11,000 to 1.66 million in the week ending Jan. 21. They are reported with a one-week lag.
These so-called continuing claims are still low, but a gradual increase since last spring suggests that it is taking longer for people who lose their jobs to find a new one.
Big picture: Jobless claims are one of the first indicators to deteriorate when the U.S. is headed toward recession, but right now they suggest the economy is still growing.
Other reports, on the other hand, suggest U.S. growth has slowed in 2023. The economy could soften even further and trigger more layoffs, analysts warn, as the Federal Reserve raises interest rates to quash high inflation.
The Fed on Wednesday raised rates again. Fed officials worry the tight labor market is causing worker pay to rise too rapidly, making it harder for them to bring inflation down.
They would like to see the demand for labor soften and expect higher interest rates to increase unemployment over the next year.
Looking ahead: “The latest jobless claims data are consistent with a tight labor market and leave the Fed on track to raise interest rates again at its March meeting,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
Market reaction: The Dow Jones Industrial Average
DJIA,
-0.52%
and S&P 500
SPX,
+0.87%
were set to open slightly higher in Thursday trades.
