- Weekly jobless claims increase from 17,000 to 240,000
- Continuing claims rose from 48,000 to 1.551 million
- Core capital goods orders rose 0.7% in October
- Shipments of key capital goods up 1.3%
WASHINGTON, Nov 23 (Reuters) – The number of Americans filing new jobless claims rose to a three-month high last week on surging tech-sector layoffs, but that likely doesn’t suggest a material change in policies. labor market conditions, which remain tight.
Weekly jobless claims data tends to be volatile around the start of the holiday season. Despite the increase in filings reported by the Labor Department on Wednesday, claims remained well below the threshold that, according to the economist, would have raised alarm bells on the labor market. The labor market remained resilient in the face of the Federal Reserve’s most aggressive interest rate hike cycle since the 1980s, aimed at containing high inflation by curbing demand in the economy.
“Layoff announcements have increased even though there is still no sign of large-scale layoffs,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York.
Initial claims for state unemployment benefits increased by 17,000 to a seasonally adjusted 240,000 for the week ending Nov. 19. The previous week’s data was revised to show 1,000 more questions than previously reported. Economists say applications would need to exceed 270,000 to raise labor market concerns.
“Any sign of a sustained increase in claims approaching the break-even level, or consistent with the absence of monthly job growth, would be cause for concern,” said Dante DeAntonio, an economist at Moody’s Analytics in West Chester, Pa. . “There is still room to soften the labor market without raising a red flag.”
Economists polled by Reuters had expected 225,000 complaints for the past week. The claims data was released a day early due to the Thanksgiving holiday on Thursday.
There has been an increase in layoffs in the tech sector, with Twitter, Amazon (AMZN.O) and Facebook’s parent Meta (META.O) announcing thousands of job cuts this month.
Uncorrected claims increased from 47,909 to 248,185 last week. They were boosted by a jump of 5,024 in California, likely reflecting job cuts in the tech sector. There have also been large increases in filings in Georgia, Illinois, Minnesota, Iowa, New York, Ohio and Michigan.
Economists, however, didn’t expect the tech sector layoffs to be a major headwind for the job market and the broader economy, noting that firms outside the tech and housing sectors were piling on workers after struggling find work in the aftermath of the COVID-19 pandemic.
“Layoff announcements need to be taken with a grain of salt as they are not set in stone and companies can change them,” said Ryan Sweet, chief US economist at Oxford Economics in West Chester, Pennsylvania.
“However, if the largest layoffs announced so far in November were to occur this month, it would raise the unrounded unemployment rate from 3.69% to 3.80%, all else being equal.”
With 1.9 job vacancies for every unemployed person in September, some of the laid-off workers could quickly find new employment.
US equities opened lower. The dollar fell against a basket of currencies. US Treasury prices have risen.
HEAVY EXPENSE FOR EQUIPMENT
The Federal Reserve raised its policy rate by 375 basis points this year, from near zero to a range of 3.75% to 4.00%.
The claims report also showed that the number of people who received benefits after an initial week of relief increased from 48,000 to 1.551 million in the week ending Nov. 12.
The so-called rolling inquiries, a proxy for hiring, covered the period during which the government surveyed households for November’s unemployment rate. Continuing claims increased between the October and November survey periods. The unemployment rate was at 3.7% in October.
A separate Commerce Department report on Wednesday showed that new orders for American-made capital goods rebounded in October, while shipments rose solidly, suggesting that business spending on equipment started the fourth quarter on a solid.
Orders for non-defense capital goods, excluding aircraft, a popular indicator of corporate spending plans, rose 0.7% last month. These so-called core capital goods orders fell by 0.8% in September. The data is not adjusted for inflation. Basic capital goods rose 9.2% year over year in October.
Shipments of key capital goods rose 1.3% after dropping 0.1% in September. Major capital goods shipments are used to calculate equipment expenditure in the gross domestic product measurement. Business spending on equipment rebounded sharply in the third quarter after contracting in the second quarter.
Orders for items ranging from toasters to airplanes expected to last three years or more accelerated 1.0% in October after rising 0.3% in September. They were buoyed by a 2.1% increase in transportation equipment orders, which followed a 2.5% increase in September.
“The growth trajectory for the fourth quarter is slowing but not contracting,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. “However, the slowdown in global economic activity increases the risk of a recession in 2023, but as of today, the economy is not in a recession.”
Reportage by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
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