New Unemployment Benefit Claims Higher Than Expected

The U.S. Labor Department reported Thursday that the number of new claims for unemployment benefits nationwide increased more than expected last week. However, the agency said the number of claims remains consistent with a “tight labor market.”

Initial claims for jobless benefits rose by 13,000 to a seasonally-adjusted level of 196,000 for the week ending on February 4. Economists Reuters surveyed had forecast that the number would be 190,000 new claims.

The biggest jumps in new claims were seen in California, Ohio and Illinois. Conversely, the largest drops in new claims were seen in Georgia, New Jersey and Texas.

The number of new claims has maintained generally low levels even though there have been a series of high-profile tech sector layoffs in recent weeks. There have also been more layoffs than usual in the finance and housing sectors, both of which are typically sensitive to changes in interest rate targets set by the Federal Reserve.

Many analysts believe U.S. companies are more reluctant to lay off workers after the COVID-19 pandemic unless necessary. In addition, they have found anecdotally that employers have been finding recruiting and retaining new talent more difficult now than before the pandemic.

Overall, the labor market still looks tight. Many industries are struggling to find workers, with 1.9 job openings now existing for every unemployed American worker as recently as December.

A survey published last week by Supply Management found that many businesses reported last month they remain “unable to hire qualified labor” because “supply is thin.”

Other economists said this week that generous severance packages for many workers recently laid off are likely delaying the filing of new unemployment benefits claims. In addition, many job openings and seasonal factors keep jobless claims lower than they might otherwise be.

Thursday’s report also shows that the number of people receiving jobless benefits increased last week by 38,000 to a total of 1.688 million overall.

The jobs report issued last Friday indicated nonfarm payrolls went up by 517,000 jobs last month. That was the most significant one-month increase since last summer. That lowered the unemployment rate to 3.4%, the lowest level in more than 53 years.

Fed chairman Jerome Powell said earlier this week that the central bank’s fight against the inflation that has raged during the Biden administration is likely to continue for “quite a bit of time.” The Fed has hiked interest rates by around 4.5% since March 2022.


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