Application numbers have been erratic in recent weeks, but have remained well below the 270,000 threshold what economists see as a warning sign for the labor market.
A series ofe layoffs in technology and interest rate sensitive industriessuch as housing, have yet to make a noticeable mark on claims, as laid-off workers seem to access new jobs with relative ease.
The Chairman of the Federal Reserve, Jerome Powellthe main architect of the central bank’s aggressive interest rate hikes aimed at reducing inflation that is too high, said this month that “it looks like we have a structural labor shortage“.
In fact, the resilience of the labor market is a central point for the authorities of the Fed, since the US economy has created an average of 392,000 new jobs a month this year despite rapid rate hikes and growing fears of a recession next year.
Officials believe that this strength provides ample scope to continue raising rates to reduce inflation, which by his preferred measure remains almost three times its target level of 2% per yeareven if it has recently shown signs of slowing down.
The central bank has raised rates from near zero in March to the current range of 4.25% to 4.50% and Fed officials project it will surpass the 5% mark in 2023, a level not seen since 2007.
Economists believe that companies are likely to reduce hiring before embarking on layoffs. Employers have generally been reluctant to lay off workers after struggling to find labor during the COVID-19 pandemic.
The claims report showed the number of people receiving benefits after an initial week of aid increased by 41 billion to 1.71 billion in the week ending Dec. 17.
Those so-called continuing orders, a gauge of hiring, have risen since early October, and the latest report is the first since February to show that they reached the trend level of 1.7-1.8 million that prevailed in the years leading up to the pandemic, a level seen then as emblematic of a tight labor market
Source: Ambito
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