US labor market resilient as recession signs strengthen

  • Weekly jobless claims increased from 5,000 to 213,000. Have become
  • Continuing claims fall from 22,000 to 1.379 million

WASHINGTON, Sept. 22 (Reuters) – The number of Americans filing new claims for unemployment benefits rose marginally last week, indicating labor despite the Federal Reserve’s effort to cool demand with aggressive interest rate hikes. The market remains tight.

The Labor Department’s weekly unemployment claims report on Thursday, the most timely data on the health of the economy, suggested job growth remained solid this month. The US Central Bank on Wednesday delivered a 75-basis-point rate hike, the third straight increase of that magnitude. This indicated more big growth to come this year. read more

“Fed officials are banging the brakes, but so far employers are giving this policy a great, big yawn and holding on tight to their employees,” said Christopher Rupkey, chief economist at FWDBONDS. “It’s either this or some kind of sneaky job loss where the redundant people are not getting unemployment benefits.”

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The Labor Department said Thursday that initial claims for state unemployment benefits reached 5,000, a seasonally adjusted 213,000 for the week ending Sept. Last week’s data was revised to file 5,000 fewer applications than previously reported. Economists polled by Reuters had forecast 218,000 applications for the latest week.

Fed Chair Jerome Powell told reporters on Wednesday that there is “only modest evidence” that the labor market is cooling, adding it continues to be “out of balance.”

Since March, the Fed has raised its policy rate by three percentage points from the current range of 3.00% to 3.25%.

Unadjusted claims rose by 19,385 to a low of 171,562 last week. There was an increase in applications in Michigan and significant growth in California, Georgia, Massachusetts and New York. Only Indiana reported a significant reduction in filings.

Economists say companies are hoarding workers after experiencing difficulties in hiring over the past year as the COVID-19 pandemic forced some people out of the workforce, partly due to the long-term lockdown caused by the virus. Due to illness.

There were 11.2 million job opportunities at the end of July, with two jobs for every unemployed person.

Stocks were trading lower on Wall Street. The dollar rose against a basket of currencies. US Treasury prices fell.

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The claims report covers the period during which the government surveyed businesses for the non-farm payroll portion of its September employment report.

Applications fell by 32,000 between the August and September survey periods, suggesting that job growth maintained its brisk pace this month. Payrolls increased by 315,000 jobs in August. Employment is now 240,000 jobs above their pre-pandemic level.

Expectations of solid job gains in September were supported on Thursday by data from time management firm UKG, which showed its monthly workforce recovery index was unchanged from August.

“With a slight decline in workforce activity over six of the past seven months, we are seeing no signs of widespread layoffs, at least among industries dependent on hourly workers,” said UKG vice president Dave Gilbertson.

The claims report shows the number of people receiving benefits after the initial week of aid declined from 22,000 in the week ended September 10 to 1.379 million. Data next week on so-called persistent claims, a proxy for hiring, will shed more light on September’s employment picture.

The Fed on Wednesday raised its average forecast for the unemployment rate this year to 3.8% from its previous forecast of 3.7% in June. It raised its forecast for 2023 to 4.4% from 3.9% projected in June, a move that economists see as a recession. The unemployment rate rose to 3.7% in August, up from 3.5% in July.

“Historically, the recession has followed an unemployment rate increase of this magnitude in a year,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “The jury is still out on whether the Fed can pull off the soft landing.”

Recession risks are mounting, with the Conference Board’s third report falling 0.5% in July with its key economic index falling 0.3% last month. The index, a gauge of future US economic activity, dropped 2.7% between February and August, reversing a 1.7% increase over the previous six months.

This pushed the index’s six-month average change below -0.4%, a range historically associated with bearish gains.

Shannon Seery, an economist at Wells Fargo in New York, said: “The fact that the six-month turnaround has breached the historic recession threshold does not guarantee a recession is imminent, but it does indicate that economic weakness is increasing.” has been.” “The aggressive tightening of the Fed, combined with the continued tightening of financial conditions, suggests that a recession may be hard to avoid.”

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Reporting by Lucia Muticani; Editing by Chizu Nomiyama and Paul Simao

Our Standards: Thomson Reuters Trust Principals.

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