- Weekly jobless claims drop from 4,000 to 222,000
- Claims in progress increased from 13,000 to 1.507 million
- New home starts drop by 4.2% in October; permits decrease by 2.4%
WASHINGTON, Nov 17 (Reuters) – The number of Americans filing new jobless claims fell last week, showing that widespread layoffs remain low despite a surge in job cuts in the tech sector that has lifted fears of an impending recession.
The Labor Department’s weekly jobless claims report on Thursday, the most timely data on the health of the economy, suggested that the job market remained tight. That, coupled with strong retail sales growth in October, will keep the Federal Reserve on track to continue raising interest rates, albeit at a slower pace amid signs that inflation is starting to ease.
“This is a testament to how tight the job market remains,” said Robert Frick, a business economist at the Navy Federal Credit Union in Vienna, Virginia.
Initial claims for state unemployment benefits fell by 4,000 to a seasonally adjusted 222,000 for the week ending Nov. 12, the Labor Department said Thursday. Economists polled by Reuters had expected 225,000 complaints for the past week.
There has been an increase in layoffs in the tech sector, with Twitter, Amazon (AMZN.O) and Facebook’s parent Meta (META.O) announcing thousands of job cuts this month. Firms in interest-rate-sensitive sectors like housing and finance are also laying off workers.
The layoffs so far have not been apparent in official data. Uncorrected requests dropped from 6,101 to 199,603 last week. Claims in California, the epicenter of job cuts in the tech sector, increased by just 302 last week. Sharp decreases in claims were recorded in Florida, Georgia, Kentucky, Indiana and Texas, offsetting notable increases in Minnesota and North Carolina.
Economists say businesses outside the technology and housing sectors are amassing workers after struggles to find work in the aftermath of the COVID-19 pandemic. With 1.9 job vacancies for every unemployed person in September, some of the laid-off workers are likely finding new employment quickly.
Goldman Sachs economists dismissed fears that tech layoffs were signaling an impending recession in a note this week. They argued that job opportunities in the tech sector remained well above their pre-pandemic level. They also noted that layoffs in the tech sector have not historically been a leading indicator of deteriorating labor markets in general.
“Announced tech job cuts have often increased without a corresponding increase in cuts in other industries and have otherwise been a random indicator,” they wrote.
The Fed raised its policy rate by 375 basis points this year, from near zero to a range of 3.75% to 4.00%, as it battles high inflation in what has become the fastest rate hikes since the 1980s. So far, the economy is weathering the stiffest storm of monetary policy, with Wednesday’s data showing strong growth in retail sales in October.
US equities opened lower. The dollar moved up against a basket of currencies. US Treasury prices have fallen.
THE HOUSES START TO FALL
The claims data covered the week in which the government surveyed business establishments for the non-farm payrolls component of the November employment report. Claims rose marginally between the October and November survey periods, suggesting another month of solid job growth. The economy created 261,000 jobs in October.
Next week’s data on the number of people receiving benefits after a first week of aid will shed more light on November’s jobs report. So-called ongoing requests, a proxy for hiring, rose by 13,000 to 1.507 million in the week ending Nov. 5, the requests report showed.
But the housing market is crumbling under the weight of higher borrowing costs.
A separate Commerce Department report on Thursday showed housing startups fell 4.2% to a seasonally adjusted annual rate of 1.425 million units last month. Economists had forecast shipments to drop at a rate of 1.410 million units. New home starts fell 8.8% year over year in October.
Single-family home starts, which account for the largest share of home construction, plunged 6.1 percent to a rate of 855,000, the lowest level since May 2020. Single-family home construction fell in all four regions. regions.
Starts for housing projects with five or more units slipped 0.5% to a rate of 556,000 units. Construction of multi-family homes has fared better as rising mortgage rates force many potential home buyers to remain renters. A key indicator of rents rose to an on-year high in October, according to the latest data on consumer prices.
The 30-year fixed rate mortgage rate averages more than 7%, the highest level since 2002, according to data from mortgage finance agency Freddie Mac.
Data on Wednesday showed that confidence among single-family home builders declined for the 11th consecutive month in November.
Permits for future homebuilding fell 2.4% to a rate of 1.526 million units in October. Single-family building permits fell 3.6% to 839,000 units.
Permits for housing projects with five or more units slipped 1.9% to a rate of 633,000 units.
Reporting by Lucia Mutikani; Editing by Paul Simao
Our standards: the Thomson Reuters Trust Principles.