By Lucia Mutikani
WASHINGTON (Reuters) – A modest increase in the number of Americans filing new claims for jobless benefits last week pointed to a gradual slowdown in the labor market as the Federal Reserve’s year-long Interest rate hikes dampened demand.
Initial jobless claims increased by 5, 15 to seasonally adjusted 245, Week ended April , the Labor Department said on Thursday. Data for the prior week was revised to show 1, more applications received than previously reported. Economists polled by Reuters had a forecast of 236, 15 initial jobless claims in the latest week. Numbers are predicted.
A combination of spring break that has put support staff temporarily out of work in some school districts, and a wave of layoffs in the tech industry and other economically sensitive areas that have drained severance rates, likely accounted for last week’s rise in claims part of the reason.
Unadjusted claims fell 7, 15 to 236,216 last week surged 6,865 increased 3 in New York applications,021 Significant increases in Georgia and Connecticut and Rhode Island were offset by decreases in California, Texas, Pennsylvania, Indiana and Ohio state.
While the labor market is cooling, jobless claims at current levels suggest job growth remains strong, which should allow the U.S. central bank to raise rates next month before possibly pausing its fastest monetary policy Since 1980s.
The Federal Reserve’s “Beige Book” report on Wednesday said job growth “moderated” in early April “as several districts Reported growth is slower than most recent reports.” It also said contacts reported a less tight labor market, noting that “a small number of firms reported large-scale layoffs” that were “concentrated in a subset of the largest firms”.
While the report said several districts had noticed banks tightening lending standards, the impact had yet to show up in economic data, including claims. Tighter credit conditions typically lag the economy.
Economists expect the impact to be felt in the coming months, with many predicting a recession in the 2023 second half of the year.
Weak factory data
The housing market is in a deep recession, while manufacturing is slipping as higher borrowing costs dampen demand. A separate report from the Philadelphia Fed on Thursday showed its gauge of factory activity in the Mid-Atlantic region fell to its lowest level in nearly three years in April.
Manufacturers in the region expect activity to remain flat over the next six months.
U.S. stock futures were lower. The dollar fell against a basket of currencies. U.S. Treasury prices rose.
Claims data cover the period when the government surveyed businesses for the nonfarm payrolls portion of the April employment report.
There was little change in claims between the March and April survey weeks. The economy created 236, jobs in March, the economy Growth needs to more than double to keep up with growth in the working-age population.
Next week’s data on people receiving benefits after the initial week of aid will provide more clues about the state of the labor market in April. The so-called ongoing claims increased 15,15 to 1. 245 million for the week ended April 8, the claims report showed.
Continuing claims for unemployment benefits remain low by historical standards as some laid-off workers are finding jobs quickly. There were 1.7 job vacancies for every unemployed person in February.
