US job market ends tense year

The number of Americans filing new claims for unemployment benefits increased last week and, a week earlier, the total number of unemployed hit the highest level since February, yet both remain at levels that indicate the labor market remains tight. , even as the Federal Reserve (Fed) works to cool the demand for labor as part of its attempt to reduce inflation.

Initial claims for state unemployment benefits increased by 9,000, to a seasonally adjusted 225,000, in the week ending December 24, the US Department of Labor reported.

Meanwhile, the number of people receiving benefits after a first week of aid increased by 41,000, to 1.71 million in the week ending December 17.

After reaching the lowest level since 1969 in May, so-called continuing applications, a proxy for hiring, have risen since early October. The latest report is the first since February to put them at the lower end of the 1.7-1.8 million trend that prevailed in the years before the pandemic, a level considered then emblematic of a tight labor market.

And while numbers for new benefit claims have been patchy in recent weeks, they remain below the 270,000 threshold that economists see as a red flag for the job market.

Given the recent uptick in redundancies announced by large companies, one would expect a higher-than-usual increase in claims at this time of year, but so far this has not happened,” Thomas Simons, an economist specializing in the market, said in a note. Jefferies currency.

It may also be that severance payments are causing a delay in when laid-off workers apply for benefits, Simons said, although “this is very hard to quantify.”

Labor market resilience is a central issue for Fed policymakers, as the US economy has created an average of 392,000 new jobs a month this year, despite rapid rate hikes and the growing fear of a recession next year. In October there were about 1.7 open jobs per unemployed, about half a point above the pre-pandemic vacancy-to-unemployment ratio.

Fed officials also forecast that by 2023 the unemployment rate could rise nearly a percentage point to 4.6%, which would be equivalent to the loss of about 1.5 million jobs.

The Labor Department will release the nation’s December employment numbers on January 6; preliminary estimates call for payrolls to increase by 200,000 people.