Unemployment claims are on the rise in the US

Application numbers have been spotty in recent weeks, but have remained well below the 270,000 threshold that economists see as a red flag for the job market.

A series of layoffs in the technology sector and interest rate-sensitive industries such as housing have yet to leave a noticeable mark on claims, as laid-off workers appear to be accessing new jobs with relative ease.

Federal Reserve Chairman Jerome Powell, the main architect of the central bank’s aggressive interest rate hikes aimed at curbing too-high inflation, said this month that “it looks like we have a structural labor shortage.”

Indeed, labor market resilience is a focus for Fed policymakers, as the US economy has created an average of 392,000 new jobs a month this year despite rapid rate hikes and mounting fears. of a recession next year.

Officials see that strength as giving them ample room to continue raising rates to reduce inflation, which by their preferred measure remains nearly three times its 2% annual target level, even if it has recently shown signs of slowing.

The central bank has raised rates from near zero in March to the current range of 4.25% to 4.50% and Fed officials project it will break above the 5% mark in 2023, a level not seen since 2007.

Economists believe companies are likely to cut back on hiring before embarking on layoffs. Employers have generally been reluctant to lay off workers after struggling to find labor during the covid-19 pandemic.

The claims report showed the number of people receiving benefits after an initial week of aid increased by 41 billion to 1.71 billion in the week ending Dec. 17.

Those so-called continuing orders, a gauge of hiring, have risen since the start of October, and the latest report is the first since February to show they have reached the trend level of 1.7-1.8 million that prevailed in the years leading up to the pandemic. a level then seen as emblematic of a tight labor market.