Skip to content

US labor market stays tight regardless of know-how sector layoffs

  • Weekly jobless claims fall 4,000 to 222,000
  • Persevering with claims improve 13,000 to 1.507 million
  • Housing begins drop 4.2% in October; permits fail 2.4%

WASHINGTON, Nov 17 (Reuters) – The variety of People submitting new claims for unemployment advantages fell final week, exhibiting widespread layoffs stay low regardless of a surge in technology-sector job cuts that has raised fears of an imminent recession.

The weekly jobless claims report from the Labor Division on Thursday, probably the most well timed knowledge on the financial system’s well being, prompt the labor market remained tight. That, along with strong shopper spending, retains the Federal Reserve on observe to proceed elevating rates of interest, although at a slower tempo amid indicators inflation was beginning to subside.

“It is a testimony to how tight the labor market stays,” stated Robert Frick, company economist at Navy Federal Credit score Union in Vienna, Virginia.

Preliminary claims for state unemployment advantages dropped 4,000 to a seasonally adjusted 222,000 for the week ended Nov. 12. Economists polled by Reuters had forecast 225,000 claims for the newest week.

There was a rise in layoffs within the know-how sector, with Twitter, Amazon (AMZN.O) and Meta (META.O), the mum or dad of Fb, saying hundreds of job cuts this month. Corporations in interest-rate delicate sectors like housing and finance are additionally letting employees go.

The layoffs have thus far not been evident in official knowledge. Unadjusted claims dropped 6,101 to 199,603 final week. Claims in California, the epicenter of the know-how job cuts, rose by solely 302 final week. Large decreases in claims have been reported in Florida, Georgia, Kentucky, Indiana and Texas, offsetting notable will increase in Minnesota and North Carolina.

Economists say companies exterior the know-how and housing sectors are hoarding employees after difficulties discovering labor within the aftermath of the COVID-19 pandemic. With 1.9 job openings for each unemployed particular person in September, a few of the employees being laid off are in all probability discovering new employment rapidly.

Economists at Goldman Sachs dismissed worries that the know-how layoffs have been flagging an imminent recession in a observe this week. They argued that know-how job openings remained nicely above their pre-pandemic stage, additionally noting layoffs within the sector haven’t traditionally been a number one indicator for deterioration within the general labor market.

The Fed has raised its coverage charge by 375 foundation factors this yr from close to zero to a 3.75%-4.00% vary because it battles to convey inflation again to the US central financial institution’s 2% goal in what has change into the quickest rate-hiking cycle for the reason that Nineteen Eighties.

Monetary markets are betting that the Fed will shift right down to a half-percentage-point charge hike at its Dec. 13-14 coverage assembly, in line with the CME Group’s FedWatch Instrument.

To this point, the financial system is weathering the tighter financial coverage storm, with knowledge on Wednesday exhibiting sturdy retail gross sales progress final month. This has led economists to anticipate that the coverage charge might see will increase for a protracted interval, finally reaching the next stage that shall be maintained for some time.

Shares on Wall Avenue have been buying and selling decrease. The greenback rose towards a basket of currencies. US Treasury costs fell.

jobless claims


The claims knowledge coated the week throughout which the federal government surveyed enterprise institutions for the nonfarm payrolls element of November’s employment report.

Claims rose marginally between the October and November survey intervals, suggesting one other month of strong job progress. The financial system created 261,000 jobs in October.

Subsequent week’s knowledge on the variety of individuals receiving advantages after an preliminary week of help will shed extra gentle on November’s employment report. The so-called persevering with claims, a proxy for hiring, elevated 13,000 to 1.507 million within the week ending Nov. 5, the very best stage since March.

Economists seen the rise as largely technical.

“Little has modified within the labor market in early November,” stated Conrad DeQuadros, senior financial advisor at Brean Capital in New York.

However the housing market is crumbling underneath the load of upper borrowing prices, whereas manufacturing is cooling. Manufacturing facility exercise within the mid-Atlantic area declined additional in November, a report from the Philadelphia Fed confirmed.

philly fed

A 3rd report from the Commerce Division confirmed housing begins decreased 4.2% to a seasonally adjusted annual charge of 1.425 million items final month. Begins dropped 8.8% on a year-on-year foundation in October.

Single-family housing begins, which account for the most important share of homebuilding, tumbled 6.1% to a charge of 855,000 items, the bottom stage since Might 2020. Single-family homebuilding declined in all 4 areas.

Begins for housing initiatives with 5 items or extra slipped 0.5% to a charge of 556,000 items. Multi-family housing building has fared higher as hovering mortgage charges drive many potential homebuyers to stay renters. A key gauge of rents emerged by probably the most on document on a year-on-year foundation in October, in line with the newest shopper value knowledge.

The 30-year fastened mortgage charge is averaging above 7%, the very best stage since 2002, in line with knowledge from mortgage finance company Freddie Mac. A survey on Wednesday confirmed confidence amongst single-family homebuilders fell for an eleventh straight month in November.

Permits for future dwelling building decreased 2.4% to a charge of 1.526 million items in October. Single-family constructing permits dropped 3.6% to a charge of 839,000 items, additionally the bottom stage since Might 2020. Permits for housing initiatives with 5 items or extra slipped 1.9% to a charge of 633,000 items.

Housing begins and constructing permits

The variety of single-family properties underneath building fell, whereas the inventory of accomplished homes was the bottom since January, suggesting provide will stay tight whilst demand slows, which might forestall an outright decline in costs.

“Rising borrowing prices and hesitant dwelling builders might make the nationwide housing scarcity worsen within the close to time period if exercise cools under 2019 ranges,” stated Jeffrey Roach, chief economist at LPL Monetary in Charlotte, North Carolina.

Reporting by Lucia Mutikani; Modifying by Paul Simao and Andrea Ricci

Our Requirements: The Thomson Reuters Belief Rules.


Leave a Reply

Your email address will not be published. Required fields are marked *