The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to the underlying strength of the labor market despite a recent spike in layoffs.
Initial claims for unemployment benefits fell by 9,000 to a seasonally adjusted 218,000 for the week ended Feb. 3, the Labor Department said Thursday. Economists polled by Reuters had forecast 220,000 claims for the past week.
Claims are little changed compared to the same period last year, despite recent high-profile layoffs, many in the technology and media industries.
Employers are generally reluctant to send employees home as they struggle to find work during and after the COVID-19 pandemic. Economists also point to rising worker productivity, marked by more than 3% annual growth for three consecutive quarters, and lowering labor costs as other factors encouraging companies to retain their workforce.
The government reported last week that nonfarm payrolls rose by 353,000 jobs in January. The unemployment rate remained unchanged at 3.7%. The continued strength of the labor market has forced financial markets to roll back expectations of the Federal Reserve’s first rate cut from March to May.
U.S. central bank officials said Wednesday they were in no rush to cut borrowing costs until they were confident inflation would fall toward the Fed’s 2% target.
Since March 2022, the Fed has raised its policy rate by 525 basis points to the current range of 5.25% to 5.50%.
The number of people receiving benefits after an initial week of assistance, a proxy for hiring, fell by 23,000 to 1.871 million in the week ending Jan. 27, the claims report showed.
First print: February 8, 2024 | 8:50 PM IST