The US job market is resilient as signs of recession strengthen

  • Weekly claims for unemployment benefits increase from 5,000 to 213,000
  • Continuous requests drop from 22,000 to 1,379 million

WASHINGTON, Sept. 22 (Reuters) – The number of Americans filing new jobless claims increased moderately last week, indicating the labor market remains tight despite the Federal Reserve’s attempt to cool demand with aggressive hikes. interest rates.

The Department of Labor’s weekly jobless claims report on Thursday, the earliest read on the health of the economy, suggested employment growth remained solid this month. The US central bank made a 75 basis point rate hike on Wednesday, its third consecutive hike of that size. It has reported larger increases coming this year. Read more

“Fed officials are holding back hard, but so far employers are just giving a big, big yawn to this policy and holding on to their workers,” said Christopher Rupkey, chief economist at FWDBOUNDS. “It’s either that or there’s some sort of invisible job loss where those who have been laid off don’t get unemployment benefits.”

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Initial state unemployment claims increased by 5,000 to seasonally adjusted 213,000 for the week ended September. 17, the Labor Department said Thursday. The previous week’s data was revised to show 5,000 fewer applications submitted than previously reported. Economists interviewed by Reuters had forecast 218,000 questions for the past week.

Fed Chairman Jerome Powell told reporters on Wednesday that “there is only modest evidence that the job market is cooling”, describing it as continuing to “get out of balance”.

Since March, the Fed has raised the benchmark rate by three percentage points bringing it to the current range of 3.00% to 3.25%.

Unadjusted loans rose 19,385 to 171,562 still low last week. There has been an increase in demand in Michigan and notable increases in California, Georgia, Massachusetts and New York. Only Indiana reported a significant decrease in filings.

Economists say companies are heaping workers after encountering hiring difficulties over the past year as the COVID-19 pandemic has forced some people to leave the workforce, in part due to prolonged illness caused by the virus.

At the end of July, there were 11.2 million jobs open, with two jobs for every unemployed person.

Wall Street shares traded lower. The dollar rose against a basket of currencies. US Treasury prices have fallen.

Jobless claims

NO MATERIAL CHANGE

The complaints report covered the period during which the government interviewed businesses for the non-farm payroll portion of the September employment report.

Applications fell by 32,000 between the August and September survey periods, suggesting that employment growth has maintained its sustained pace this month. Wages rose 315,000 jobs in August. Employment is now 240,000 jobs above the pre-pandemic level.

Expectations of solid job gains in September were supported by Thursday’s data from time management firm UKG showing that its monthly workforce recovery index remained unchanged from August.

“With a slight decline in workforce activity in six of the past seven months, we see no indication of widespread layoffs, at least among industries that depend on hourly workers,” said UKG Vice President Dave Gilbertson.

The compensation claims report showed that the number of people receiving benefits after an initial week of aid fell by 22,000 to 1,379 million in the week ending September. 10. Next week’s data on so-called compensation claims, a hiring proxy, will shed more light on the September employment picture.

The Fed on Wednesday raised its median forecast for the unemployment rate this year to 3.8% from its previous 3.7% forecast in June. He raised his estimate for 2023 to 4.4% from the 3.9% forecast in June, a move economists considered recessive. The unemployment rate rose to 3.7% in August from 3.5% in July.

“Historically, a rise in the unemployment rate of this magnitude in one year has been followed by a recession,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “The jury has not yet decided whether the Fed can achieve a soft landing.”

Recession risks are on the rise, with a third Conference Board report showing that its Leading Economic Index fell 0.3% last month after falling 0.5% in July. The index, an indicator of future US economic activity, fell 2.7% between February and August, reversing a 1.7% increase in the preceding six months.

This pushed the index’s half-yearly average change below -0.4%, a threshold historically associated with a recession.

“The fact that the six-month shift has passed the historic recession threshold does not guarantee that a recession is imminent, but it signals that economic weakness is widening,” said Shannon Seery, an economist at Wells Fargo in New York. “This combined with continued tightening of financial conditions due to the Fed’s aggressive tightening suggests that a recession may be more difficult to avoid.”

Main indicators

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Reportage by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao

Our Standards: Thomson Reuters Trust Principles.

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