The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to a still-tight labor market, while the economy rebounded faster than previously estimated in the third quarter.
Labor market strength, which also was underscored by some shrinking of unemployment rolls in early December after mostly expanding since October, raises the risk that the Federal Reserve could continue raising interest rates to a higher level and keep them there for a while as it tackles inflation. The U.S. central bank is trying to cool demand for everything from housing to labor to bring inflation back to its 2% target.
“The economy isn’t quite as close to death’s door as markets had thought,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The Fed may well need to raise interest rates even higher in 2023 because the economy isn’t slowing so upward price pressures may persist.”
Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 216,000 for the week ended Dec. 17, leaving the bulk of the prior week’s decline intact, Labor Department data showed on Thursday.
Economists polled by Reuters had forecast 222,000 claims for the latest week. Claims have swung up and down in recent weeks, but have remained below the 270,000 threshold, which economists said would raise a red flag for the labor market.
A raft of layoffs in the technology sector and interest-rate sensitive industries like housing have not had a material impact on claims so far. Unadjusted claims dropped 4,064 to 247,867 last week, amid big declines in California, Indiana, Ohio and Texas, which offset a large increase in Massachusetts.
Click here to read the full report from Lucia Mutikani at Reuters.
