Jobless claims unexpectedly drop to lowest level in 9 months
Number of Americans applying for unemployment falls to lowest level since April
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The number of Americans filing for unemployment benefits unexpectedly dropped last week, falling to the lowest level in nine months.
Figures released Thursday by the Labor Department show initial claims for the week ended Jan. 28 fell to 183,000 from the unrevised 186,000 recorded a week earlier. That is below the 2019 pre-pandemic average of 218,000 claims and is the lowest since April 2022.
Continuing claims, filed by Americans who are consecutively receiving unemployment benefits, fell slightly to 1.65 million for the week ended Jan. 21, a decrease of 11,000 from the previous week. One year ago, nearly 1.89 million Americans were collecting unemployment benefits.
JOB OPENINGS UNEXPECTEDLY SURGE TO 11 MILLION IN DECEMBER
Pedestrian passes a "Help Wanted" sign in the door of a hardware store in Cambridge, Mass., July 8, 2022. (Reuters/Brian Snyder / Reuters Photos)
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.
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.
US COMPANIES OFFERING RECORD-HIGH RAISES TO RETAIN WORKERS, KEEPING PRESSURE ON INFLATION
Policymakers have already approved eight consecutive rate increases and signaled at the conclusion of their two-day meeting on Wednesday that additional hikes are on the table 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.
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)
"I would say it is a good thing that the disinflation that we have seen so far has not come at the expense of a weaker labor market," Chairman Jerome Powell told reporters on Wednesday. "But I would also say that the disinflationary process that you now see underway is really at an early stage."
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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.