The number of Americans filing new claims for unemployment benefits dropped to a nine-month low last week as the labor market remains resilient despite higher borrowing costs and mounting fears of a recession this year.
The surprise decline in weekly jobless claims reported by the Labor Department on Thursday raised cautious optimism that the economy could skirt a recession or just experience a shallow and short downturn. Federal Reserve Chair Jerome Powell told reporters on Wednesday that “the economy can return to 2% inflation without a really significant downturn or a really big increase in unemployment.”
“Someday soon, economists will have to take down those calls for recession in 2023 because the labor market refuses to budge from the lowest unemployment rate in decades,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
Initial claims for state unemployment benefits dropped 3,000 to a seasonally adjusted 183,000 for the week ended Jan. 28, the lowest level since April 2022. It was the third straight weekly decline in applications. Economists polled by Reuters had forecast 200,000 claims for the latest week.
Unadjusted claims slipped 872 to 224,356 last week. There were notable declines in applications in Kentucky, California and Ohio, which offset increases in Georgia and New York.
Claims have been running low this year, consistent with a persistently tight labor market. The government reported on Wednesday that there were 11 million job openings at the end of December, with 1.9 openings for every unemployed person.
“The labor market has yet to respond meaningfully to a rapid increase in interest rates,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
Click here to read the whole story from Lucia Mutikani at Reuters.