Jobless claims fall under 200,000 to lowest level in 16 months, but it’s not as good as it looks

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The numbers: The number of Americans who applied for unemployment benefits in mid-January fell to a 16-month low of 187,000, but it’s not a sign of the labor market or broader U.S. economy getting any stronger.

Initial jobless claims slid by 16,000 in the seven days ended Jan. 13 from 203,000 in the prior week, based on seasonally adjusted figures. Yet the decline was exaggerated by a plunge in filings in New York state related to school holidays.

Actual or unadjusted filings in the Empire State fell by 17,176 to 20,800, reversing a big increase in the prior week. These ups and downs happen in New York several times a year around school holidays.

New jobless claims also tend to see-saw around the holiday season that stretches from Thanksgiving until Martin Luther King Jr. Day because of temporary hiring.

That’s why economists prefer to wait until February before trying to glean broader trends in the labor market.

Big picture: After a big surge in hiring over the past few years, businesses are pulling back.

Yet there’s enough demand for goods and services, even with the economy slowing, that most companies are avoiding layoffs.

A strong jobs market and low unemployment rate have been the economy’s strongest bulwark against recession in a period of rising interest rates.

Key details: New jobless claims only fell in 22 of the 53 states and territories that report these figures to the federal government.

New claims rose in 31 other states, but the increases were small.

The number of people collecting unemployment benefits in the U.S., meanwhile, slid by 26,000 to 1.81 million.

Still, a gradual rise in these so-called continuing claims over the past year is a sign it’s taking longer for people to find new jobs.

Looking at actual or unadjusted figures, initial jobless claims totaled 289,228 last week, compared to 288,330 in the same week one year earlier. That also shows that the rate of layoffs remains low.

Looking ahead: “Filings for jobless benefits fell last week to the lowest in 16 months, a testament for how resilient the labor market continues to be,” said Tuan Nguyen, U.S. economist at RSM. “We don’t see many reasons to believe the labor market will show significant declines until the summer.”

Market reaction: The Dow Jones Industrial Average
and S&P 500
were mixed in Thursday trading.

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