A Help Wanted sign is displayed in a Manhattan store window on December 02, 2022 in New York City.
Spencer Platt | Getty Images
The number of Americans filing new jobless claims fell unexpectedly last week, suggesting the job market remains tight despite higher interest rates.
Initial jobless claims for the state fell by 15,000 to a seasonally adjusted 190,000 in the week ended Jan. 14, the Labor Department said on Thursday. Economists polled by Portal had forecast 214,000 applications last week.
Part of the surprise decline in claims was likely due to ongoing challenges adjusting the data for seasonality earlier in the year.
Seasonal volatility has kept claims at levels consistent with a tight labor market, even as layoffs have accelerated in tech and rate-sensitive sectors like finance and housing.
Microsoft said Wednesday it would cut 10,000 jobs, joining cloud-computing rival Amazon.com, which this month began telling employees about its own 18,000 job cuts. Economists warned against interpreting the tech layoffs as an indication of deteriorating labor market conditions, arguing that these companies are the right size after over-hiring during the Covid-19 pandemic.
“The technology sector is just getting back to where it was in 2020 or 2021, which I don’t think is a bad situation,” said John Blevins, visiting professor at SC Johnson College of Business at Cornell. “It’s still a huge workforce. Those people who get laid off at these big tech companies will find new replacement jobs almost immediately.”
Outside of the tech industry, economists say companies are generally reluctant to send workers home after struggling to find workers during the pandemic. They expect companies to cut hiring before resorting to layoffs.
In fact, the Federal Reserve’s Beige Book reported on Wednesday that “many firms were reluctant to lay off employees even as demand for their goods and services slacked, and planned to reduce headcount through turnover where necessary.”
The claims data covered the period when the government surveyed businesses about the non-farm payrolls component in the January jobs report.
Applications declined between the December and January survey weeks. The economy created 223,000 jobs in January.
Data next week on the number of people receiving benefits after an initial week of assistance, a proxy for hiring, will shed more light on January job growth. For the week ended January 7, so-called ongoing claims rose by 17,000 to 1.647 million, the claims report showed.
This story evolves. Please check again for updates.