May 11, 2021

US weekly jobless claims rise modestly; labor market solid

3 min read

WASHINGTON: The number of Americans filing for unemployment benefits increased less than expected last week, suggesting the labor market continues to tighten even as job growth is slowing.

Initial claims for state unemployment benefits rose 6,000 to a seasonally adjusted 211,000 for the week ended Jan. 18, the Labor Department said on Thursday. Claims had declined for five straight weeks, resulting in the unwinding of the surge seen in early December, which was blamed on a later-than-normal Thanksgiving Day.

Claims data for the prior week was revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had forecast claims increasing to 215,000 in the latest week.

The Labor Department said claims for Alabama, California, Delaware, Hawaii, Kansas, Puerto Rico and Virginia were estimated because of Monday’s Martin Luther King holiday, which left authorities with less time to compile the data.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,250 to 213,250 last week, the lowest level since September.

U.S. financial markets were little moved by the data.

Last week’s claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of January’s employment report.

The four-week moving average of claims dropped 12,500 between the December and January survey periods, suggesting some pickup in job growth this month.

JOB GROWTH SLOWING

The economy created 145,000 jobs last month after adding a massive 256,000 positions in November. The slowdown in job growth has been blamed on a shortage of workers amid the longest economic expansion on record, now in its 11th year.

Trade tensions have also weighed on manufacturing, leading to job losses at factories. Despite the low level of claims, the data have been showing layoffs in manufacturing, as well as transportation and warehousing, construction, educational service and accommodation and food services industries from late 2019 through mid-January.

That appears to fit in with the Federal Reserve’s Beige Book, which last week showed “most districts cited widespread labor shortages as a factor constraining job growth,” and “a number of districts reported job cuts or reduced hiring among manufacturers,” as well as “scattered reports of job cuts in the

transportation and energy sectors,” in the tail end of 2019.

The government last August estimated the economy created 501,000 fewer jobs in the 12 months through March 2019 than previously reported, the biggest downward revision in the level of employment in a decade. That suggests job growth over that period averaged around 170,000 per month instead of 210,000. The revised payrolls data will be published on Feb. 7.

Economists believe subsequent employment growth could be revised down. Despite the moderation in job gains, the labor market remains on solid footing, with the unemployment rate holding near a 50-year low of 3.5per cent in December and a measure of labor market slack dropping to an all-time low of 6.7per cent.

Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid dropped 37,000 to 1.73 million for the week ended Jan. 11. The so-called continuing claims had surged to 1.80 million at the end of 2019, which was the highest level since April 2018. The jump was blamed on year-end volatility.

The four-week moving average of the so-called continuing claims increased 2,000 to 1.76 million in the most recent week.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)