D.C., Nov. 16 (Reuters) – Last week saw a decrease in the number of Americans requesting new unemployment benefits, indicating that the rate of widespread layoffs has remained low. This has helped to maintain a tight labor market despite the Federal Reserve’s aggressive interest rate increases to slow down economic growth.
The Labor Department said on Thursday that initial claims for state unemployment benefits decreased by 4,000 to a seasonally adjusted 222,000 for the week ending Nov. 12. There were 1,000 more applications submitted than originally indicated in the data for the previous week. 225,000 claims were predicted by economists surveyed by Reuters for the most recent week.
The number of layoffs in the internet industry has increased, as evidenced by the hundreds of job losses announced this month by Twitter, Amazon, and Meta, the parent company of Facebook. Companies in interest rate-sensitive industries like finance and housing are also laying off employees.
Official data has not yet shown any evidence of layoffs, with claims this year circling between the 166,000 and 261,000 mark.
According to economists, businesses outside the technology and housing industries are storing up workers since it has been difficult to locate workers since the COVID-19 outbreak.
In September, there were 1.9 job opportunities for every unemployed individual, so some of the employees who are being let go are presumably swiftly finding new jobs. Fears of an impending recession have grown as a result of the recent spike in technological layoffs.
However, in a report this week, Goldman Sachs economists rejected this idea. They maintained that the number of IT job postings was still significantly higher than it was before the outbreak. They also mentioned that historically, layoffs in the technology industry have not been a strong predictor of a general decline in the job market.
They stated that announced job cuts in the IT industry “have repeatedly soared without a comparable increase in cuts in other sectors and have otherwise been a coincidental signal.”
As it battles high inflation, the Fed has increased its policy rate by 375 basis points this year, making it the fastest rate-hiking cycle since the 1980s. It is now in the range of 3.75%–4.00%. According to figures released on Wednesday, solid retail sales growth in October indicates that the economy is so far surviving the storm caused by tighter monetary policy.
The claims information covers the week that the government questioned commercial businesses for the nonfarm payrolls section of the jobs report for November. Between the October and November survey periods, claims slightly increased.
More information on November’s employment report will be provided by next week’s data on the number of individuals getting benefits following a first week of assistance. According to the claims report, the so-called continuing claims, a stand-in for hiring, rose 13,000 to 1.507 million in the week ending Nov. 5.
