tightening of the labor market; Layoffs are lowest in nearly 30 years

People line up outside a newly reopened job center for personal appointments in Louisville, US, April 15, 2021. REUTERS/Amira Carrod/File Photo

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  • Weekly jobless claims increased from 28,000 to 222,000
  • Continuing claims down 107,000 to 1.956 million
  • Layoffs down 34.8% to 14,875 in November

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits rose less than expected last week, a sign of tightening labor market conditions, while layoffs fell to a 28-1/2-year low in November. .

Thursday’s weekly jobless claims report from the Department of Labor, the latest timely data on the health of the economy, showed that lists of unemployment benefits fell below 2 million for the first time since the COVID-19 pandemic began in the United States nearly two years ago.

The upbeat news in the labor market added to the strong consumer and manufacturing spending data in a sign that the economy was picking up after picking up pace in the third quarter. However, the Omicron variant of the coronavirus is a danger to the bright picture.

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In a sign of a strengthening economy, Federal Reserve Chairman Jerome Powell told lawmakers this week that the US central bank should consider accelerating the pace of ending its bond purchases at its December 14-15 policy meeting.

“Companies are not laying off workers as they did during a recession,” said Christopher Robke, chief economist at FWDBONDS in New York. “Powell was right to suggest that the Fed may speed up the tapering process because a tight labor market means that increased demand for wages will fan the flames of inflation.”

Initial claims for state unemployment benefits rose by 28,000 to a seasonally adjusted 222,000 for the week ended November 27. Claims fell to 194,000 in the previous week, the lowest number since 1969.

It tends to be volatile at this time of year.

Economists polled by Reuters had forecast 240,000 orders in the last week. Claims are down from a record 6.149 million in early April 2020.

Unadjusted claims fell 41,622 to 2111896 last week amid sharp declines in filings in California, Texas and Virginia, which offset spikes seen in North Carolina and Wisconsin.

“Before the seasonal adjustment, claims generally rise in the cooler months, but related layoffs may not occur as usual this year due to a tight labor market,” said Daniel Silver, an economist at JPMorgan in New York. This may continue in the coming weeks.”

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. US Treasury bond prices fell.

EYES ON PAYROLLS

The claims data has no bearing on the department’s closely watched employment report for November, due for release on Friday, because it falls outside the period during which the government surveyed businesses and households regarding the number of nonfarm payrolls and the unemployment rate.

Claims declined between mid-October and mid-November.

According to a Reuters survey of economists, non-farm payrolls likely increased by 550,000 jobs last month after rising by 531,000 in October. The unemployment rate is expected to fall to 4.5% from 4.6% in October.

Also calling for continued improvement in the labor market, the ADP National Employment Report on Wednesday showed that private jobs increased by 534,000 jobs last month. A survey by the Institute of Supply Management showed a gauge of manufacturing employment rose to a seven-month high.

The Conference Board’s labor market differential – derived from data on consumers’ opinions of whether jobs are plentiful or hard to come by – jumped to a record high in November.

The good news flow in the labor market continued, with another report Thursday from global recruiting firm Challenger, Gray and Christmas showing that job cuts announced by US employers fell 34.8% in November to 14,875, the lowest number since May 1993.

But a shortage of workers is hindering faster job growth.

The Federal Reserve’s Beige Book on Wednesday described employment growth ranging from “modest to strong” across US central bank regions during October and early November, with contacts citing “the continuing difficulty in hiring and retaining staff.”

There were 10.4 million jobs as of the end of September. The workforce is down 3 million people from its pre-pandemic level, despite the expiration of generous federally funded benefits, the reopening of schools for personal learning and corporate pay raises.

Thursday’s claims report showed that the number of people receiving benefits after an initial week of aid fell from 107,000 to 1.956 million in the week ending November 20.

The lowest level in so-called ongoing claims since mid-March 2020 likely reflects a group of people exhausting their benefits as well as finding work. A total of 2.31 million people were receiving unemployment checks under all programs in mid-November.

However, the supply of labor may remain scarce. A survey from the Chamber of Commerce on Thursday showed no urgent need to return to work among the many Americans who have lost their jobs during the pandemic and are still out of work.

“It is increasingly clear that the workforce challenges facing our country extend beyond those caused by the pandemic and we cannot simply assume that people will return to the workforce,” said Susan Clark, president of the Chamber of Commerce.

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(Reporting by Lucia Mutikani) Editing by Chizu Nomiyama and Andrea Ricci

Our criteria: Thomson Reuters Trust Principles.

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