Jobless claims fall despite mounting layoffs in tech sector
New first-time applications for jobless benefits fell last week, even as major technology and media companies announced thousands of layoffs, according to data released Thursday by the Labor Department.
In the week ending Jan. 21, initial claims for unemployment insurance totaled 186,000 after seasonal adjustments, down 6,000 from the previous week’s total of 190,000. Roughly 197,500 Americans filed to begin new cycles of jobless benefits each week over the past month, still well below pre-pandemic averages.
New weekly jobless claims are not necessarily a perfect reflection of layoffs, as some Americans who have lost their jobs may not have applied yet for unemployment benefits. The thousands of layoffs announced by companies such as Microsoft, Alphabet and Amazon are also relatively small in proportion to the natural churn of millions of layoffs and new hirings each year.
But experts say the persistence of low weekly jobless claims is a sign that laid-off workers still have plenty of chances to find new jobs in a resilient economy.
“Announcements of layoffs, particular in the tech sector, continue, but those job losses haven’t translated into a notable rise in claims,” wrote Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
“That suggests that these workers are finding it relatively easy to find other jobs or are confident they will be able to do so.”
The strong jobless claims data is the latest sign of the U.S. economy holding sturdy in the face of high inflation, rising interest rates and deep global uncertainty.
The U.S. economy grew 2.1 percent in 2022 and at an annualized pace of 2.9 percent in the fourth quarter, according to data released Thursday by the Commerce Department. The U.S. also added 4.5 million jobs last year with an average monthly gain of 375,000, according to the Labor Department.
The steadiness of the U.S. economy as it slows from torrid growth in 2021 and the steady decline of inflation has boosted hopes among some economists that the U.S. can avoid a recession in 2023.
“This morning’s two major data drops delivered more ammunition for an economic soft landing,” Robert Frick, corporate economist at Navy Federal Credit Union, said in a Thursday analysis.
“This year will see employment, consumer spending and GDP falling, but they’re starting with good momentum, and their descent will be slowed by diminishing inflation. Together those trends increase the odds for a soft landing.”
Many economists still expect the recession they predicted for 2022 to finally hit this year, but say it will likely be less severe than first feared and nowhere close to the toll of the past two U.S. recession.
“We do expect claims to trend higher as layoffs become more widespread as a recession emerges in the second quarter. However, we expect employers, many of whom continue to cite finding workers a challenge, will be slow to lay off employees they have struggled to find,” Vanden Houten wrote.
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