The number of people filing for unemployment benefits and continuing claims in the United States both climbed to two-month highs, showing signs of a certain slowdown in the labor market.

According to U.S. data released on Thursday, initial jobless claims rose by 9,000 to 224,000 in the week ended January 27, while a foreign media survey of economists showed that the median forecast was 212,000 people.

In the week ending January 20, the number of people continuing to claim unemployment benefits rose to 1.9 million.

The U.S. labor market has continued to beat economists' forecasts over the past year despite stubbornly high interest rates. However, there are already signs that the labor market is cooling. Compared with the peak of the post-epidemic recovery, fewer people have resigned; at the same time, the large-scale layoff plans recently announced by many companies, including United Parcel Service (UPS), may be the reason for the increase in unemployment in the coming months. early signal.

Initial jobless claims typically fluctuate widely. To smooth out short-term fluctuations, the four-week moving average increased to 207,750, the largest increase since November.

Initial claims, which are not seasonally adjusted, showed the number increased by about 11,000 to about 261,000. California, New York and Oregon saw the most significant increases.

U.S. employers announced plans to cut more than 82,300 jobs last month, more than double the number in December, according to an earlier report from Challenger, Gray & Christmas. At the same time, hiring plans in January hit the weakest level for the same period in history.

Anna Wong and Eliza Winger of the Foreign Media Economic Research Department pointed out that due to factors related to the epidemic, low-level unemployment benefit application data may not accurately reflect the actual situation of the labor market.

Wong and Winger wrote in a recent report that the share of unemployed Americans receiving unemployment benefits has fallen to historic lows as ineligibility conditions and weekly benefits have failed to keep pace with inflation, which could lead to more unemployment. Many people are choosing to work part-time rather than apply for benefits.

After Fed officials kept interest rates steady on Thursday, Powell called the labor market "strong" at a news conference, adding:

"It's returning to equilibrium, which is what we want to see."

On Friday, the United States will release non-farm payroll data for January, which will further reveal the state of the labor market.

However, this non-agricultural report may be disturbed by seasonal factors and the January adjustment of the statistical baseline, and we need to be alert to the uncertainty caused by this. The market currently expects it to increase by 180,000 people, which is slower than the previous increase of 216,000 people.

Another labor market report showed that U.S. labor productivity showed rapid growth in the fourth quarter, and efficiency improved significantly throughout the year, which provided impetus for economic growth in the context of easing inflation.

According to data released by the U.S. Bureau of Labor Statistics on Thursday, the output per hour of non-farm employees, or productivity, continued to rise at an annual rate of 3.2% after a revised 4.9% surge in the previous period.

Unit labor costs, how much companies pay employees to produce a unit of output, rose 0.5% in the fourth quarter after falling a revised 1.1% in the third quarter of last year.

Productivity increased by 2.7% in the fourth quarter of last year compared with 2022, exceeding the average growth rate over the past 25 years. This is a positive sign for Fed officials seeking to further curb inflationary progress.

The rebound in productivity not only made up for the largest annual decline on record in 2022, but also achieved positive growth.

Sustained efficiency improvements allow companies to boost pay without sacrificing profits or limiting price increases, and if growth continues this year, it will lay the foundation for further increases in real income.

Labor costs are the largest expense for many businesses, so companies often seek new technologies and upgrade equipment to make employees more productive, thereby mitigating the impact of rising wages on inflation. Data show that unit labor costs increased by 2.3% in the fourth quarter compared with the same period last year.

The productivity and labor cost report showed output rose 3.7% in the fourth quarter compared with the previous three months, while growth in hours worked slowed to 0.4%. As a result, hourly wage compensation growth remained essentially unchanged at 3.7%.

Thanks to a stronger-than-expected boost in consumer spending during the holiday season, the U.S. economy still maintained strong growth in the fourth quarter of last year, with U.S. fourth-quarter GDP growing by 3.3%.

Article forwarded from: Golden Ten Data