Despite mounting layoffs in the tech sector, the number of Americans submitting new claims for jobless benefits rose to a three-month peak last week. However, this likely does not indicate a significant change in the tight job market circumstances.
Data on weekly unemployment claims are frequently erratic as the holiday season gets underway. The Labour Department announced a rise in filing on Wednesday, although claims remained significantly below the level that economists predicted would raise concerns about the labour market.
In spite of the Federal Reserve’s most severe interest rate hike cycle since the 1980s, which was intended to reduce excessive inflation by reducing economic demand, the jobs market has stayed resilient.
Although there is still no indication of widespread redundancies, layoff notices have increased, according to Rubeela Farooqi, the chief U.S. economist at renowned High-Frequency Economics located in White Plains, New York.
For the week ending Nov. 19, original claims for state unemployment benefit increased by 17,000 to a seasonally adjusted 240,000. There were 1,000 more applications submitted than originally indicated in the data for the previous week. According to economists, claims would need to surpass 270,000 in order to cause alarm about the labour market.
Dante DeAntonio, an economy expert at the Moody’s Analytics, based in West Chester, Pennsylvania—said any indication of a prolonged spike in claims that reaches the break-even level or that is commensurate with no monthly employment gain would be cause for alarm. Without raising a red signal, there is still some potential for the labour market to soften.
225,000 claims were predicted by economists surveyed for the most recent week. Due to the Thanksgiving Day holiday on Thursday, the claims data was released one day early.
With Twitter, Amazon (AMZN.O), and Meta (META.O), the parent company of Facebook, all announcing thousands of job losses this month, there has been an upsurge in layoffs in the tech industry.
Last week, unadjusted claims increased by 47,909 to 248,185. They were helped by a 5,024 increase in California, which was probably caused by job losses in the IT industry. Additionally, the number of filings significantly increased in Georgia, Iowa, Illinois, Minnesota, Ohio, New York, and Michigan.
However, economists noted that businesses outside of the tech and housing areas were stockpiling workers as a result of difficulties filling jobs in the wake of the COVID-19 pandemic, so they did not anticipate that layoffs in the technology sector would have a significant negative impact on the labour market and the economy overall.
Ryan Sweet, the chief U.S. economist at well-known Oxford Economics, situated in West Chester, Pennsylvania, advised businesses to treat layoff announcements with caution because they are not final and may change.
However, all else being equal, if the biggest layoffs announced in November were to take place this month, the overall average unemployment rate would increase from 3.69% to 3.80%.
Some of the employees who were let go may rapidly find new employment because there were 1.9 job opportunities for every unemployed individual in September.
US stocks started out weaker. In relation to a currency basket, the dollar decreased. Treasury prices increased.
The Federal Reserve increased its policy rate this year by 375 basis points, moving it from close to zero to a range of 3.75%-4.00%.
The claims data also revealed that during the week ending Nov. 12, there were 1.551 million more persons getting benefits than the previous week, a rise of 48,000.
The government polled households to determine the unemployment rate for November within the period covered by the supposed continuing claims, which serve as a stand-in for hiring. Between the month of October and November poll periods, continuing claims climbed. In October, the rate of unemployment was 3.7%.