U.S. weekly jobless claims plunge; layoffs drop in August
The number of Americans filing new claims for unemployment benefits declined further last week, while layoffs dropped in August, consistent with strong demand for workers and tight labor market conditions.
Initial claims for state unemployment benefits decreased 5,000 to a seasonally adjusted 232,000 for the week ended Aug. 27, the Labor Department said on Thursday. Data for the prior week was revised to show 6,000 fewer applications filed than previously reported. Economists polled by Reuters had forecast 248,000 applications for the latest week.
Despite hefty interest rate increases from the Federal Reserve to tame inflation, which have raised the risk of a recession, there is no sign yet of widespread layoffs.
The government reported this week that there were 11.2 million job openings at the end of July, with two jobs for every unemployed person. Labor market resilience continues to dispel fears that the economy is in recession after gross domestic product contracted in the first half of the year. The Fed has hiked its policy rate by 225 basis points since March.
Claims remained anchored below the 270,000-300,000 range that economists say would signal a material slowdown in the labor market. The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased from 26,000 to 1.438 million in the week ending Aug. 20.
The claims data has no bearing on August’s employment report, scheduled to be released on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 300,000 jobs last month after surging by 528,000 in July.
While job growth is slowing, labor market conditions remain tight.
A separate report from global outplacement firm Challenger, Gray & Christmas on Thursday showed job cuts announced by U.S.-based employers fell 21% to 20,485 in August. Though layoffs rose 30% from a year ago, they were down 27% in the first eight months of this year compared to the same period in 2021.
“Employment data continue to point to a strong labor market. Job openings are high, layoffs are low, and workers seem to have slowed their resignations,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. “If a recession is imminent, it’s not yet reflected in the labor data.”
The technology industry accounted for nearly a quarter of the job cuts announced in August. Technology companies have announced 14,408 layoffs so far this year, a 70% surge from the same period last year.
Overall, employers announced plans to hire 41,985 workers in August, up 65% from July.
Though hiring is down 55% from a year ago, it is up 18% so far in 2022 compared to the same period in 2021.
