Tighter and Tighter: Jobless Claims Fall Again as ‘Extremely Tight’ Labor Market Rolls On

WASHINGTON, DC - FEBRUARY 01: Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on February 01, 2023 in Washington, DC. The Federal Reserve announced a 0.25 percentage point interest rate increase to a range of 4.50% to 4.75%. (Photo by …
Photo by Kevin Dietsch/Getty Images

The number of people applying for jobless benefits in the U.S. fell again last week, the third week in which new claims have come in below 200,000.

The Labor Department said initial claims for state unemployment benefits fell to 183,000 in the week ended January 28, down from 186,000 a week prior. This is the lowest level of new claims since April of last year.

Claims can be volatile from week to week, so many economists prefer to look at the four-week moving average of claims. This fell by 5,750 from the prior week to 191,750. This is the second consecutive week in which the four-week average has been below 200,000.

Continuing claims get reported with a one-week lag.  For the week ended January 21, continuing claims fell by 11,000 to 1,655,000. The previous week’s level was revised down by 9,000 from 1,675,000 to 1,666,000. The 4-week moving average fell by 10,500 to 1,651,500. The previous week’s average was revised down by 2,250 from 1,664,250 to 1,662,000.

The labor market continues to signal that employers have a voracious appetite for workers despite a slowdown in the housing and manufacturing sectors. On Wednesday, the Labor Department said there were 11 million job vacancies at the end of December, an unexpected increase in openings. This brought the ratio of vacancies to unemployed people to 1.9 to one, near the record high hit last year.

Federal Reserve Chairman Jerome Powell highlighted the tight labor market at his press conference on Wednesday.

“Despite the slowdown in growth, the labor market remains extremely tight, with the unemployment rate at a 50-year low, job vacancies still very high, and wage growth elevated,” Powell said. “Job gains have been robust, with employment rising by an average of 247,000 jobs per month over the last three months. Although the pace of job gains has slowed over the course of the past year and nominal wage growth has shown some signs of easing, the labor market continues to be out of balance. Labor demand substantially exceeds the supply of available workers, and the labor force participation rate has changed little from a year ago.”

Fed officials worry that the imbalance between supply and demand for workers will hamper their ability to bring inflation down to their two percent target.

On Friday, the Labor Department will release its report on the jobs situation in January. Economists expect that employers added 187,000 workers to payrolls, down from the 223,000 added in December. Unemployment is expected to tick up to 3.6 percent from the very low level of 3.5 percent recorded at the end of last year.


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