WASHINGTON (Reuters) – The number of Americans filing new applications for unemployment benefits increased more than expected last week, but remained at levels consistent with a healthy labor market.
Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 217,000 for the week ended Jan. 11, the Labor Department said on Thursday. Economists polled by Reuters had forecast 210,000 claims for the latest week.
Claims data tend to be volatile at the start of the year, but have continued to signal low layoffs that are underpinning the labor market and broader economy.
Nonfarm payrolls increased by 256,000 jobs in December while the unemployment rate dropped to 4.1% from 4.2% in November.
The Federal Reserve’s Beige Book report on Wednesday described employment as having “ticked up on balance” in early January. It said “contacts across multiple sectors noted difficulty finding skilled workers, and reports of layoffs remained rare,” but added “contacts in some districts expressed greater uncertainty about their future staffing needs.”
Labor market resilience, still-warm inflation and uncertainty over the impact of plans by President-elect Donald Trump for broad tariffs and mass deportations of undocumented immigrants led the U.S. central bank to project only two interest rate cuts this year compared to the four it had forecast in September. Trump, who will be inaugurated next week, has also pledged tax cuts, which would fuel growth.
No rate cut is expected at the Fed’s Jan. 28-29 policy meeting. Financial markets expect the next reduction in borrowing costs will come in June. But Bank of America Securities believes the easing cycle is over.
The central bank launched its easing cycle in September and has lowered its benchmark overnight interest rate by 100 basis points to the current 4.25%-4.50% range. The policy rate was hiked by 5.25 percentage points 2022 and 2023.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 18,000 to a seasonally adjusted 1.859 million during the week ending Jan. 4, the claims report showed.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
Comments