WASHINGTON, Dec 2 — The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to tightening labour market conditions, while layoffs tumbled to the lowest level in 28-1/2 years in November.
The weekly unemployment claims report from the Labour Department on Thursday, the most timely data on the economy’s health, also showed jobless benefits rolls falling below 2 million for the first time since the Covid-19 pandemic started in the United States more than 20 months ago.
The upbeat news on the labour market added to strong consumer spending and manufacturing data in suggesting that the economy was accelerating after hitting a speed bump in the third quarter. The Omicron variant of the coronavirus, however, poses a risk to the brightening picture.
Federal Reserve Chair Jerome Powell in a nod to the strengthening economy told lawmakers this week that the US central bank should consider accelerating the pace of winding down its bond purchases at its December 14-15 policy meeting.
“Companies are not laying off workers like they did during the recession,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Powell was right to hint the Fed might speed up the tapering process because a tight labour market means increasing wage demands will stoke the fires of inflation.”
Initial claims for state unemployment benefits rose 28,000 to a seasonally adjusted 222,000 for the week ended November 27. Claims dropped to 194,000 in the prior week, which was the lowest number since 1969.
They tend to be volatile around Thanksgiving, the start of the holiday season. Economists polled by Reuters had forecast 240,000 applications for the latest week. Claims have declined from a record high of 6.149 million in early April 2020.
Unadjusted claims fell 41,622 to 211,896 last week. There were sharp declines in filings in California, Texas and Virginia, which offset notable rises in North Carolina and Wisconsin.
US stocks opened higher. The dollar fell against a basket of currencies. US Treasury prices were lower.
Eyes on payrolls
Last week’s data has no bearing on the department’s closely watched employment report for November, scheduled to be published tomorrow, as it falls outside the period during which the government surveyed businesses and households for the nonfarm payrolls count and the unemployment rate. Claims declined between mid-October and mid-November.
According to a Reuters survey of economists, nonfarm payrolls probably increased by 550,000 jobs in November after rising 531,000 in October. The unemployment rate is forecast dipping to 4.5 per cent from 4.6 per cent in October.
Also arguing for continued improvement in the labour market, the ADP National Employment report yesterday showed private payrolls increased by 534,000 jobs last month. A measure of manufacturing employment rose to a seven-month high, a survey from the Institute for Supply Management showed.
The Conference Board’s labour market differential — derived from data on consumers’ views on whether jobs are plentiful or hard to get — jumped to a record high in November.
The run of good news on the labour market was extended by a separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showing job cuts announced by US-based employers dropped 34.8 per cent in November to 14,875, the fewest since May 1993. So far this year, there have been 302,918 job cuts, down 86 per cent compared to the same period in 2020.
But worker shortages are hindering faster job growth. The Federal Reserve’s Beige Book on Wednesday described employment growth ranging from “modest to strong” across Fed districts during October and early November, with contacts noting “persistent difficulty in hiring and retaining employees.”
There were 10.4 million job openings as of the end of September. The workforce is down 3 million people from its pre-pandemic level, even as generous federal government-funded benefits have expired, schools have reopened for in-person learning and companies are raising wages.
But there is hope that worker shortages could start easing soon. Thursday’s claims report showed the number of people receiving benefits after an initial week of aid plunged 107,000 to 1.956 million in the week ended November 20.
The lowest level in the so-called continuing claims since mid-March 2020 likely reflected a combination of people exhausting their benefits as well as finding work. A total 2.31 million people were receiving unemployment checks under all programs in mid-November. — Reuters