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US unemployment claims fall unexpectedly, housing remains tight | Business and Economy News

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting another month of solid job growth and a continuing tightening labor market despite the Federal Reserve’s efforts. Confederation to cool down demand for workers.

The weekly jobless claims report from the US Department of Labor on Thursday may not change expectations that the US central bank will further scale back a rate hike next month. However, it poured cold water on financial markets on hopes that the Fed would pause its fastest rate-raising cycle since the 1980s, which was fueled by a drop in retail sales in December. and inflation fell.

“The low level of layoffs shows that demand for workers remains strong and labor market conditions remain tight,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York. . “Faced with labor shortages and hiring challenges, businesses seem reluctant to reduce their headcount.”

Initial state jobless claims fell 15,000 to a seasonally adjusted 190,000 for the week ended January 14, the lowest level since September. Reuters predicted 214,000 claims in the latest week.

Part of the third consecutive weekly decline in claims may reflect continued challenges in adjusting data for seasonal fluctuations at the start of the year.

But through seasonal volatility, claims remain in line with the tight labor market even as layoffs increase in the tech industry and interest-sensitive sectors like finance. main and housing.

Unadjusted claims fell 53,582 to 285,575 last week. There has been a jump in claims for the US state of California, according to estimates. That was offset by significant declines in Georgia, Michigan, New Jersey, Wisconsin, New York and Texas.

Appropriate size

Microsoft Corp said on Wednesday that it will eliminate 10,000 jobsjoins cloud computing rival Amazon.com, which is pushing ahead with its plans lay off 18,000 employees. But economists warn against taking tech layoffs as a sign of worsening labor market conditions, arguing that companies have scaled appropriately after hiring too much. much during the COVID-19 pandemic.

“The tech sector is going to be back where it was in 2020 or 2021, which I don’t think is that,” said John Blevins, a guest lecturer at Cornell University’s Samuel Curtis Johnson Graduate School of Management. bad. “It’s still a huge workforce. People who are laid off at these big tech companies will get new replacement jobs almost immediately.”

Outside the tech industry, economists say companies are often reluctant to send workers home after difficulties finding workers during the pandemic. They expect companies to cut hiring before laying off employees.

Indeed, the Fed’s latest “Beige Book” report on Wednesday found that “many companies are hesitant to lay off employees even as demand for their goods and services slows and plan to decline.” number of employees through attrition if necessary”.

US stocks opened lower on Thursday. The dollar is slightly weaker against a basket of currencies. US Treasuries fell.

Housing market downturn

A worker with a plan to inspect the construction of a four-story, 45-unit apartment building in Portland, Maine, USA
Economists predict housing market downturn to continue into 2023 [File: Robert F Bukaty/AP Photo]

The Fed last year raised its policy rate by 425 basis points from near zero to the current 4.25%-4.5%, the highest level since late 2007. In December, it is expected at least 75 basis points of increasing borrowing costs by the end of 2023.

Claims data released on Thursday covers the length of time the government surveyed businesses for the nonfarm payrolls component of January’s jobs report.

Claims fell between the December and January survey weeks. The economy added 223,000 jobs in January.

Next week’s data on the number of people receiving benefits after the first week of aid, a proxy for hiring, will shed more light on January job growth. In the week ended January 7, so-called continued claims rose 17,000 to 1.6 million, the claims report showed.

Tighter monetary policy is continuing to strangle the housing market. A separate report from the US Department of Commerce on Thursday showed single-family construction activity rebounded in December, but future building permits fell to less than 2, 5 years, indicating an upcoming weakening trend.

The number of single-family homes that started construction, which accounts for the majority of housing construction, rose 11.3% to a seasonally adjusted annual rate of 909,000 units last month, the highest level since August. Commencement of housing projects with five or more units decreased by 18.9% to 463,000 units.

Total housing started to decline 1.4 percent to 1.3 million units last month. Housing starts to decline 3 percent in 2022.

Single-family building permits fell 6.5% to 730,000 units, the lowest level since April 2020. Aside from the pandemic plunge, the number of permits is the lowest since February. 2016. Construction permits for housing projects with five or more units increased 7.1% to a rate of 555,000 units.

Building permits overall fell 1.6% to 1.3 million units. Permits drop 5 percent by 2022.

“The housing market downturn is likely to continue for most of 2023,” said Abbey Omodunbi, senior economist at PNC Financial in Pittsburgh, Pennsylvania.



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