- Weekly jobless claims increase from 17,000 to 240,000
- Continued claims rose 48,000 to 1,551 million
- Orders for basic capital goods rebounded 0.7% in October
- Shipments of basic capital goods increase by 1.3%
WASHINGTON, Nov 23 (Reuters) – The number of Americans filing new jobless claims rose last week to a three-month high amid mounting layoffs in the tech sector, but that probably doesn’t suggest a material change in labor market conditions, to remain tight.
Weekly jobless claims data tends to be volatile at the start of the holiday season. Despite the increase in filing reported by the Labor Department on Wednesday, claims remained well below the threshold that the economist said would raise red flags about the labor market. The labor market has remained resilient in the face of the Federal Reserve’s most aggressive interest rate hike cycle since the 1980s aimed at curbing high inflation by curbing demand in the economy.
“Layoff announcements have increased, although there are no signs of broad-based layoffs yet,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York.
Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 240,000 for the week ending Nov. 19. Data from the previous week was revised to show 1,000 more applications filed than previously reported. Economists say applications would have to exceed 270,000 to raise concerns about the job market.
“Any sign of a sustained increase in claims that is close to breakeven, or not consistent with monthly job growth, would be cause for concern,” said Dante DeAntonio, an economist at Moody’s Analytics in West Chester, Pennsylvania. “There is still room for the labor market to soften without raising a red flag.”
Economists polled by Reuters had forecast 225,000 applications for the past week. The claims data was released a day early due to the Thanksgiving holiday on Thursday.
Unadjusted claims soared from 47,909 to 248,185 last week. They were boosted by a jump of 5,024 in California, likely reflecting job cuts in the tech sector. There were also large increases in filings in Georgia, Illinois, Minnesota, Iowa, New York, Ohio, and Michigan.
The economists, however, did not expect the layoffs in the technology sector to be a major drag on the labor market and the broader economy, noting that companies outside the technology and housing sectors were hoarding workers after of the difficulties in finding a job after the COVID-19 pandemic. .
“Layoff announcements should be taken with a grain of salt, as they are not set in stone and can be adjusted by companies,” said Ryan Sweet, chief US economist at Oxford Economics in West Chester, Pennsylvania.
“Still, if the biggest layoffs announced so far in November were to occur this month, the unrounded unemployment rate would rise from 3.69% to 3.80%, all other things being equal.”
With 1.9 job vacancies for every jobless person in September, some of the laid-off workers could find new jobs quickly.
US stocks opened lower. The dollar fell against a basket of currencies. US Treasury prices rose.
STRONG EQUIPMENT SPENDING
The Federal Reserve raised its policy rate by 375 basis points this year from near zero to a range of 3.75%-4.00%.
The claims report also showed that the number of people receiving benefits after an initial week of relief rose from 48,000 to 1.551 million in the week ending Nov. 12.
The so-called continuous claims, a proxy for hiring, covered the period during which the government surveyed households for the November unemployment rate. Continuing claims increased between the October and November survey periods. The unemployment rate stood at 3.7% in October.
A separate report from the Commerce Department on Wednesday showed that new orders for US-made capital goods rebounded in October while shipments rose solidly, suggesting that business spending on equipment started the fourth quarter on a strong footing. solid.
Non-defense capital goods orders excluding aircraft, a closely watched indicator of business spending plans, rose 0.7% last month. These so-called basic capital goods orders decreased by 0.8% in September. The data is not adjusted for inflation. Basic capital goods increased by 9.2% year-on-year in October.
Shipments of core capital goods rose 1.3% after falling 0.1% in September. Shipments of basic capital goods are used to calculate equipment spending in the measure of gross domestic product. Business spending on equipment rebounded sharply in the third quarter after contracting in the second quarter.
Orders for items ranging from toasters to airplanes that must last three years or more accelerated 1.0% in October after rising 0.3% in September. They were driven by a 2.1% rise in transportation equipment orders, which followed a 2.5% rise in September.
“The growth trajectory for the fourth quarter is slowing but not contracting,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. “However, the slowdown in global economic activity increases the risk of recession in 2023, but as of today, the economy is not in recession.”
Reporting by Lucía Mutikani; Edited by Chizu Nomiyama and Andrea Ricci
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