Jobless claims unexpectedly drop to 190,000, lowest level in four months
Number of Americans applying for unemployment falls to lowest level in 16 weeks
Payne Capital Management president Ryan Payne claims the U.S. economy will see a soft landing in 2023 after markets respond positively to the December jobs report.
The number of Americans filing for unemployment benefits unexpectedly dropped last week, falling to the lowest level in four months.
Figures released Thursday by the Labor Department show initial claims for the week ended Jan. 14 fell to 190,000 from the unrevised 205,000 recorded a week earlier. That is below the 2019 pre-pandemic average of 218,000 claims and matches a low notched in mid-September.
Continuing claims, filed by Americans who are consecutively receiving unemployment benefits, rose slightly to rose slightly to 1.65 million for the week ended Jan. 7, an increase of 17,000 from the previous week. One year ago, nearly 2.30 million Americans were receiving unemployment benefits.
Pedestrian passes a "Help Wanted" sign in the door of a hardware store in Cambridge, Mass., July 8, 2022. (Reuters/Brian Snyder / Reuters Photos)
"Despite growing evidence of deceleration in the economy and a growing chorus of layoff announcements, it’s not yet apparent in jobless claims data," said Jim Baird, the CIO of Plante Morgan Financial Advisors. "For now, the data points to a labor market that is grinding ahead against the weight of slowing demand."
The labor market remains a bright spot in the economy, but there are some early signs that it is beginning to soften. The economy added just 223,000 jobs in December, the smallest gain in two years.
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A plethora of big tech companies, including Amazon and Microsoft, have also announced thousands of job cuts in recent weeks as they brace for a possible recession.
The economy is slowing as the Federal Reserve raises interest rates at the fastest pace in decades in order to crush runaway inflation. Although the labor market is still healthy, both the housing and manufacturing sectors are weakening and inflation remains painfully high.
Job seekers visit booths during the Spring Job Fair at the Las Vegas Convention Center Friday, April 15, 2022. ((K.M. Cannon/Las Vegas Review-Journal) / Getty Images)
Policymakers have already approved seven straight rate increases in 2022 and have signaled that more hikes are to come this year as they try to cool the economy — and the labor market.
Fed officials have made it clear that they expect unemployment to climb as a result of higher rates, which could force consumers and businesses to pull back on spending.
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Updated projections from the central bank's December meeting show that officials expect unemployment to rise to 4.5% by the end of next year, up from the current rate of 3.5%.
That could mean more than 1 million Americans lose their jobs between now and the end of 2023.