The number of Americans filing new claims for unemployment benefits fell last week, showing widespread layoffs remain low, keeping the labor market tight despite the Federal Reserve’s aggressive interest rate hikes to cool demand in the economy.
Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 222,000 for the week ended Nov. 12, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications filed than previously reported. Economists polled by Reuters had forecast 225,000 claims for the latest week.
There has been an increase in layoffs in the technology sector, with Twitter, Amazon (AMZN.O) and Meta (META.O), the parent of Facebook, announcing thousands of job cuts this month. Companies in interest-rate sensitive sectors like housing and finance are also letting workers go.
The layoffs have so far not been evident in official data, with claims hovering in the middle of their 166,000-261,000 range this year.
Economists say businesses outside the technology and housing sectors are hoarding workers after difficulties finding labor in the aftermath of the COVID-19 pandemic.
With 1.9 job openings for every unemployed person in September, some of the workers being laid off are probably finding new employment quickly. The surge in technology layoffs has raised fears that a recession was imminent.
Economists at Goldman Sachs, however, dismissed this notion in a note this week. They argued that technology job openings remained well above their pre-pandemic level. They also noted technology sector layoffs have not historically been a leading indicator for deterioration in the overall labor market.
“Announced tech job cuts have frequently spiked without a corresponding increase in cuts in other sectors and have otherwise been a coincidental indicator,” they wrote.
The Fed has raised its policy rate by 375 basis points this year from near zero to a 3.75%-4.00% range as it battles high inflation in what has become the fastest rate-hiking cycle since the 1980s. So far, the economy is weathering the tighter monetary policy storm, with data on Wednesday showing strong retail sales growth in October.
The claims data covered the week during which the government surveyed business establishments for the nonfarm payrolls component of November’s employment report. Claims rose marginally between the October and November survey periods.
Next week’s data on the number of people receiving benefits after an initial week of aid will shed more light on November’s employment report. The so-called continuing claims, a proxy for hiring, increased 13,000 to 1.507 million in the week ending Nov. 5, the claims report showed.