The numbers: The number of Americans who applied for unemployment benefits at the end of January rose to a nearly three-month high of 224,000, possibly a sign of some softening in what’s been an incredibly strong labor market.
Initial jobless claims increased by 9,000 in the seven days ended Jan. 27 from 215,000 in the prior week, based on seasonally adjusted figures.
New jobless claims are starting to become more normal again after the usual fluctuations during the holiday season stretching Thanksgiving until Martin Luther King Jr. Day.
While they still show a surprisingly resilient labor market characterized by low layoffs and low unemployment, new claims appear to have wafted higher in the new year.
Key details: New jobless claims rose in 29 of the 53 states and territories that report these figures to the federal government. The biggest increases were in California, Oregon and New York.
New claims fell slightly in 24 other states.
The number of people collecting unemployment benefits in the U.S., meanwhile, rose by 70,000 to 1.9 million. That’s the highest level since mid-November.
A gradual rise in these so-called continuing claims over the past year is a sign it’s taking longer for people to find new jobs.
Looking at actual or unadjusted figures, initial jobless claims might be even weaker than it appears. They totaled 261,029 last week, compared to 225,026 in the same week a year earlier.
Unadjusted claims bear close watching in the next few weeks to see if they subside again. A spate of companies have announced layoffs in the new year and it remains to be seen how widespread they become.
Big picture: Business are hiring at a slower pace compared to last year, but they have been reluctant to lay off workers because of a tight labor and steadily growing economy.
The labor market could get a boost later in the year if the Federal Reserve cuts interest rates as widely expected.
What is unclear is whether wages would start to rise faster under that scenario and complicate the Fed’s job to fully tame inflation.
Looking ahead: “We may see a modest rise in claims as labor market conditions ease further,” said lead U.S. economist Michael Pearce of Oxford Economics. “However, we don’t expect a sharp rise in claims as we look for job growth to slow but remain positive.”
Market reaction: The Dow Jones Industrial Average
DJIA
and S&P 500
SPX
were set to rise in Thursday trading.
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