U.S. applications for jobless aid fell again last week to their lowest level since April, further evidence that the job market has withstood aggressive rate hikes by the Federal Reserve as it attempts to cool the economy and bring down inflation.
Applications for jobless aid in the U.S. for the week ending Jan. 28 fell by 3,000 last week to 183,000, from 186,000 the previous week, the Labor Department reported Thursday. It was the third straight week claims were under 200,000 and the fifth straight weekly decline.
Jobless claims generally serve as a proxy for layoffs, which have been relatively low since the pandemic wiped out millions of jobs in the spring of 2020.
The four-week moving average of claims, which flattens out some of the week-to-week volatility, declined by 5,750 to 191,750.
The Fed on Wednesday raised its main lending rate by 25 basis points, its eighth rate hike in less than a year. The central bank’s benchmark rate is now in a range of 4.5% to 4.75%, its highest level in 15 years. Chair Jerome Powell appeared to suggest Wednesday that he foresees two additional quarter-point rate hikes.
So far, the Fed’s aggressive policy has pushed inflation down, but has had less impact on a resilient U.S. job market.
On Wednesday, the government reported that U.S. job openings rose to 11 million in December, up from 10.44 million in November and the highest since July. For 18 straight months, employers have posted at least 10 million openings — a level never reached before 2021 in Labor Department data going back to 2000. The number of openings in December meant that there were about two vacancies for every unemployed American.
Last month’s job report told a similar story: U.S. employers added a solid 223,000 jobs in December, pushing the unemployment rate down to 3.5%, matching a 53-year low.
The Labor Department releases its monthly jobs report for January on Friday, where analysts expect the U.S. economy to have added another 185,000 jobs. That would be the lowest number in more than two years.
Evidence of Slowing Wage Growth
Within the monthly jobs data, there is some evidence of slowing wage growth, another of the Fed’s goals. Average hourly pay growth in December eased to its slowest pace in 16 months, which could reduce pressure on employers to raise prices to offset their higher labor costs.
Though the U.S. labor market remains robust, layoffs have been mounting in the technology sector, which is dealing with falling demand after a pandemic boom. IBM, Microsoft, Amazon, Salesforce, Facebook parent Meta, Twitter and DoorDash have all announced layoffs recently.
The Fed’s interest rate hikes have hit the real estate sector the hardest, largely due to higher mortgage rates — currently above 6% — that have slowed home sales for 11 straight months. That’s almost step-in-step with the Fed’s rate hikes that began last March.
About 1.66 million people were receiving jobless aid the week that ended Jan. 21, down 11,000 from the week before.
