[Asia Economy New York=Special Correspondent Joselgina] Despite concerns about an economic recession and consecutive corporate layoffs, the number of weekly unemployment claims in the United States has dropped to its lowest level in four months. This is evaluated as indicating that the labor market overheating has not cooled down despite the Federal Reserve's (Fed) high-intensity tightening.
According to the U.S. Department of Labor on the 19th (local time), the number of new unemployment claims last week (January 8?14) was recorded at 190,000. This is 15,000 fewer than the previous week and the lowest figure since September last year. It also fell short of experts' forecast of 214,000 claims. Initially, the number of unemployment claims was expected to increase last week, but contrary to expectations, it showed a decline.
Although layoffs have accelerated since the second half of last year, mainly in interest rate-sensitive sectors such as tech companies and housing, recent employment indicators suggest that a robust labor market is still being maintained. The Wall Street Journal (WSJ) reported, "Although the number of claims is higher than the low point in early 2022, it is approaching the pandemic level when the labor market was tight," adding, "Corporate layoffs have not yet led to an increase in unemployment claims."
The day before, Microsoft officially announced layoffs of 10,000 employees. Amazon also began notifying layoffs starting the same day. As previously announced, the largest-ever layoff of 18,000 employees has begun in earnest. In addition, financial institutions such as Goldman Sachs have also announced cost-cutting plans including workforce reductions one after another.
WSJ analyzed that some of the laid-off workers may have quickly found new jobs in the still-hot labor market instead of claiming unemployment benefits. John Brevins, a visiting lecturer at Cornell University's Johnson Business School, also said, "People laid off from tech companies will almost immediately find new jobs." Labor supply is still not smooth, and unlike the tech industry, other sectors that struggled to secure manpower during the pandemic are evaluated to be more reluctant to restructure such as workforce reductions. The Beige Book released by the Fed the day before also included content that many companies are planning layoffs due to demand slowdown but are hesitant to proceed with dismissals.
The number of continuing unemployment claims, which are filed for at least two weeks, increased by 17,000 to 1,647,000. However, this data is based on two weeks ago. Some in the market suggest that the recent decline in unemployment claims may be a temporary phenomenon caused by seasonal adjustment of statistical figures. It is explained that data discrepancies can be confirmed during the year-end and New Year holidays when there are many holidays.
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