The strong data on the United States labor market comes even as the number of workers in the technology sector has increased.
US jobless claims fell again last week to their lowest level since April, further evidence that the labor market has weathered the Federal Reserve’s aggressive rate hikes in an effort to cool the economy and reduce inflation.
U.S. jobless claims for the week ended Jan. 28 fell by 3,000 to 183,000 last week from 186,000 the previous week, the U.S. Labor Department reported on Thursday. It was the third straight week of inquiries below 200,000 and the third straight weekly decline.
Jobless claims typically serve as the basis for layoffs, which have been relatively low since the coronavirus pandemic wiped out millions of jobs in the spring of 2020.
The four-week moving average of claims, which smooths out some of the week-to-week volatility, fell 5,750 to 191,750.
The Fed raised its key lending rate by 25 basis points on Wednesday, the eighth rate hike in less than a year. The central bank’s benchmark rate is now in the range of 4.5 percent to 4.75 percent, the highest level in 15 years. Fed Chairman Jerome Powell appeared to be proposing two additional quarter-point rate hikes on Wednesday.
So far, the Fed’s aggressive policy has reduced inflation, but has had less of an impact on the resilient US labor market.
On Wednesday, the government reported that US job vacancies rose to 11 million in December, up from 10.44 million in November and the highest since July. For 18 consecutive months, employers have posted at least 10 million new jobs, a level never reached before 2021 in Labor Department data dating back to 2000. The number of job openings in December meant that there were about two job openings for every unemployed American.
Last month’s jobs report told a similar story: U.S. employers added a solid 223,000 jobs in December, pushing the unemployment rate down to 3.5 percent, a 53-year low.
The Labor Department releases its monthly jobs report for January on Friday, and analysts expect the US economy to have added another 185,000 jobs. That would be the lowest in more than two years.
The monthly jobs data showed some evidence of a slowdown in wage growth, another of the Fed’s targets. Average hourly wage growth fell to its slowest pace in 16 months in December, which could reduce pressure on employers to raise prices to offset higher labor costs.
While the U.S. labor market remains stable, layoffs are on the rise in the tech sector, which is facing a drop in demand after the pandemic boom. IBM, Microsoft, Amazon, Salesforce, Facebook parent company Meta, Twitter and DoorDash have recently announced layoffs.
The Fed’s rate hikes have hit the real estate sector the hardest, largely because higher mortgage rates, currently above 6 percent, have slowed home sales for 11 consecutive months. That’s almost in step with the Fed’s rate hikes that began last March.
About 1.66 million people received unemployment benefits in the week ending Jan. 21, down 11,000 from the week before.