The number of Americans filing for unemployment benefits dropped to its lowest level in five weeks, even as several high-profile companies announced layoffs.
According to the Labor Department’s report on Thursday, jobless claims fell by 12,000 to 201,000 for the week ending Feb. 17.
The four-week average of claims, which is a less volatile measure, also decreased by 3,500 to 215,250, down from the previous week’s 218,750.
Weekly unemployment claims are widely considered as a gauge of US layoffs in a given week. Despite efforts by the Federal Reserve to cool down the economy, these claims have remained at historically low levels in recent years.
The Federal Reserve began raising its benchmark borrowing rate in March 2022, with a total of 11 rate hikes, in an attempt to address the four-decade high inflation that followed the strong economic rebound from the COVID-19 recession in 2020.
Despite concerns that the rapid rate hikes could weaken the labor market and potentially lead the country into a recession, the job market has remained robust and the economy has shown resilience, largely due to strong consumer spending.
In January 2024, US employers added a remarkable 353,000 jobs, surpassing economists’ expectations and indicating the economy’s ability to withstand the highest interest rates in two decades. This job gain was double the December figure of 333,000, which was revised significantly higher. The unemployment rate remained at 3.7%, marking 24 consecutive months below 4%, the longest streak since the 1960s.
While overall layoffs remain low, there has been a recent increase in job cuts, particularly in the technology and media sectors. Companies like Alphabet (Google’s parent company), eBay, TikTok, Snap, and the Los Angeles Times have all announced layoffs. Last week, Cisco Systems announced plans to cut 4,000 jobs.
In addition to the tech and media industries, UPS, Macy’s, and Levi’s have also recently reduced their workforce.
In total, 1.86 million Americans were receiving jobless benefits during the week ending Feb. 10, a decrease of 27,000 from the previous week.
Despite a significant easing in inflation over the past year, consumer prices remain well above the Fed’s 2% target, as reported by the Labor Department last week.
The Fed has kept rates unchanged at its last four meetings.
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