The number of Americans filing new claims for jobless benefits dropped to a three-month low last week while layoffs fell 43% in December, pointing to a still-tight labor market that could force the Federal Reserve to keep hiking interest rates.
Labor market resilience was underscored by other data on Thursday showing private employers hired far more workers than expected last month. The reports suggested the economy ended 2022 on solid footing, despite a raft of layoffs in the technology industry as well as in interest rate-sensitive sectors like finance and housing.
The sustained jobs market strength raises the risk that the Fed, engaged in its fastest interest rate-hiking cycle since the 1980s as it tries to dampen demand to tame inflation, could boost its target interest rate above the 5.1% peak the U.S. central bank projected last month and keep it there for a while.
“Fed officials are expecting a slowing in the job market given the big increase in interest rates last year,” said Stuart Hoffman, senior economic advisor at PNC Financial in Pittsburgh, Pennsylvania. “Right now, the labor market is too tight for the Fed, and job ‘growth is too strong.’”
Click here to see the full story from Lucia Mutikani at Reuters.com.
