Jobless Claims to Drop to 190,000 as the Labor Market Remains Tight

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According to Department of Labor data issued Thursday, the number of first claims for unemployment insurance surprisingly decreased to 190,000 for the week ending January 14. According to consensus estimates on Refinitiv, the most recent number is the lowest in 15 weeks and significantly lower than the 214,000 economists had predicted.

Initial claims, which are used as a proxy for layoffs, have remained at a consistent level, indicating that the labor market is still tight. The number of persons filing for continued unemployment benefits, known as continuing claims, reached 1.65 million for the week ending January 7. The prior monthly total was 1.63 million, thus this is an increase. Particularly during the holidays, weekly unemployment claims data is inconsistent and usually subject to modification. Despite the pandemic's aftereffects, geopolitical unpredictability, skyrocketing inflation, and the Federal Reserve's efforts to bring down prices, the US labor market has remained strong. In a statement released on Thursday, Stuart Hoffman, senior economic consultant for PNC Financial Services, stated that "the Fed would welcome a more significant slowing in job growth."

Job growth has slowed recently, and layoff announcements have increased in frequency, notably from technology companies. However, Robert Frick, a business economist at Navy Federal Credit Union, said that doesn't always mean that there would be more unemployment. “The labor market is still so tight that many tech workers, and workers with other skills, are snapped up well before they need to collect an unemployment check. And they are more likely to be snapped up by smaller firms, which have a much greater demand for workers than major corporations,” Frick added.