The number of Americans filing new claims for unemployment benefits fell sharply last week as the labor market remained resilient despite higher borrowing costs and rising fears of a recession.
Initial claims for national unemployment benefits fell 3,000 to a seasonally adjusted 183,000 for the week ended Jan. 28, the Labor Department said on Thursday. Economists polled by Reuters had even forecast 200,000 claims for the latest week.
Claims have eased this year, consistent with a resilient labor market even as the Federal Reserve's fastest rate-hiking cycle since the 1980s has raised the risk of a recession heading into the second half of the year.
The government reported on Wednesday that there were 11 million job openings at the end of December, with 1.9 openings for every unemployed person. Outside of the technology industry and interest rate-sensitive sectors such as housing and finance, employers are reluctant to lay off workers after struggling to find labor during the pandemic, and also because they are optimistic economic conditions will improve later this year.
A report from the Institute for Supply Management on Wednesday said manufacturer data "suggests that they will not cut the number of workers significantly as it was positive in the second half of the year."
U.S. central bank today raised its policy rate by 25 basis points to a range of 4.50%-4.75%, and promised a "continued increase" in borrowing costs. Fed Chairman Jerome Powell told reporters that "the economy can return to 2% inflation without a very significant downturn or a very large increase in unemployment."
The claims report showed the number of people receiving benefits after the initial week of aid, a proxy for hiring, fell 11,000 to 1.655 million in the week ended Jan. 21.
The claims data has no bearing on the January jobs report, scheduled for release on Friday, because it falls outside the survey period. According to a Reuters poll of economists, the NFP reading likely rose by 185,000 jobs last month. The economy created 223,000 jobs in December.
A series of layoffs in the technology sector drove job cuts in January. A separate report on Thursday from global placement firm Challenger, Gray & Christmas showed job cuts announced by US-based employers jumped 136% to 102,943. It was the highest January total since 2009.
The technology sector accounted for 41% of the layoffs, with 41,829 layoffs. Retailers announced 13,000 job cuts, while financial firms planned to lay off 10,603 workers.
Last month, employers announced plans to hire 32,764 workers, mostly in the entertainment/leisure sector, down 37% from December and 58% from a year ago.
