US labour market was still resilient at the end of 2022 | Business and Economy News
The number of Americans filing new claims for unemployment benefits fell to a three-month low last week while the layoff rate fell 43% in December, suggesting a still-tight labor market that could force the Bureau of Labor Statistics. The Federal Reserve continues to raise interest rates.
The labor market’s resilience was underscored by other data on Thursday that showed private employers hired more workers than expected last month. Reports show the economy ended 2022 on solid footing, despite a flurry of layoffs in the tech industry, as well as in interest-sensitive sectors like finance and housing.
The job market’s resilience has raised the risk that the Fed, which has engaged in the fastest rate hike cycle since the 1980s as it tries to dampen demand to tame inflation, may increase the target interest rate above the 5.1% peak predicted by the US central bank last month and hold it there for a while.
“Fed officials are expecting the job market to slow due to the sharp rise in interest rates last year,” said Stuart Hoffman, senior economic adviser at PNC Financial in Pittsburgh, Pennsylvania. “Right now, the labor market is too tight for the Fed and job growth is too strong.”
Initial state jobless claims fell 19,000 to a seasonally adjusted 204,000 for the week ended December 31, the lowest level since late September. of Reuters predicted 225,000 claims in the latest week. Through the volatility of the year-end holiday season, claims have remained very low.
Unadjusted claims rose 5,703 to 275,552 last week. There were notable increases in claims in New Jersey, New York, Pennsylvania and Michigan, offsetting declines in Missouri, Texas and Kentucky.
Economists speculate that severance packages and still strong demand for workers, making it easier for laid-off workers to find another job, are keeping claims low . They also said companies are likely to slow hiring before laying off staff after struggling to find workers during the pandemic.
The Labor Department reported on Wednesday that there were 10,458 million job openings at the end of November, equivalent to 1.74 jobs for each unemployed person.
US stocks opened lower. The dollar rose against a basket of currencies. US Treasuries fell.
The labor market is very tight
Last year, the Fed raised its policy rate by 425 basis points from near zero to 4.25% – 4.5%, the highest level since late 2007. Last month, it projected spending borrowing costs will increase by at least 75 basis points by year-end. of the year 2023.
Minutes of the Fed’s December 13-14 policy meeting, released on Wednesday, showed officials noting that the labor market remained “very tight,” with “some remarking that some Business contacts have reported that they will want to retain workers even amid a slowdown in demand for output because of their recent experiences of labor shortages and recruitment challenges.” .
The claims report also shows that the number of people receiving benefits after the first week of aid, a proxy for recruitment, fell 24,000 to 1.694 million in the week ended December 24.
A separate report from global employment agency Challenger, Gray & Christmas on Thursday showed that US-based employers announced 43,651 job cuts in December, a 43 per cent drop from 11. However, this total is 129 percent higher than in December 2021 and is the second-largest monthly figure published in 2022.
For the full year of 2022, the number of job cuts increased 13% to 363,824. This is still the second-lowest annual total on record since The Challenger began tracking the series in 1993.
A Tuesday report showed private payrolls rose 235,000 jobs last month after rising 182,000 in November. Economists had expected the ADP’s national jobs report to show an increase of 150,000. private employment.
Reports were released ahead of Friday’s release of the Labor Department’s more comprehensive and closely watched employment report for December.
Nonfarm payrolls are forecast to add 200,000 jobs, according to a survey of economists by Reuters. The economy created 263,000 jobs in November.
Wednesday’s report from the Commerce Department showed that the trade deficit narrowed 21% to $61.5 billion in November, the lowest level since September 2020. The trade gap narrowed, the largest since from February 2009, reflecting a decline in commodity imports to a 13-month low.
While the smaller import bill is a boost to gross domestic product from an accounting perspective, it is also a sign that domestic demand is cooling amid high borrowing costs. However, it will make up for the weakness in exports. The smaller trade deficit was the biggest contributor to the economy’s 3.2% annualized growth in the third quarter. Estimates of fourth-quarter growth are as high as 3.8 percent.
“Trade will support fourth-quarter GDP,” said Ryan Sweet, chief economist at Oxford Economics. “Strong economic growth raises the risk of a recession occurring later than our current second-quarter 2023 baseline expectations.”