US Jobless Claims Fall Further

The number of Americans filing first-time claims for unemployment benefits fell to 183,000 last week, again dashing estimates, the Labor Department reported on Thursday.

The number compares to 186,000 in the prior week and to projections of 200,000. The four-week moving average fell from 5,750 to 191,750. The figures have been trending down in recent weeks in a surprise considering the overall state of the economy.

The job market remains very strong even as the economy slows and the Federal Reserve continues to raise interest rates in an attempt to battle inflation. Fed Chairman Jerome Powell cited the recent slowing of wages in a press conference on Wednesday but added that the labor market continues to be “out of balance” between demand for and supply of workers.

Earlier Wednesday, the government reported there were 11 million open jobs as of the end of December, an increase of more than a half-million from November’s 10.4 million. There are now 1.9 jobs for every unemployed person.

On Friday, the Labor Department will issue its monthly report on the number of people hired in December, with analysts looking for an increase of about 185,000 after November’s gain of 223,000.

“If private employment is finally starting to roll over or if companies are not replacing workers let go, that is a change worth noting, and we will discuss it then,” Brad McMillan, chief investment officer for Commonwealth Financial Network, said on Wednesday. “But for the moment, signs are that, overall, the labor market remains healthy.”

“The real question for investors will be whether the economy is turning down in a significant way or whether it is still in a better spot with continued moderate growth,” he added. “The data suggests the latter.”

Private payroll processor ADP said Wednesday that its survey of employers found 106,000 jobs added last month — well below estimates — but added that it believes the number was adversely affected by winter weather.

“It’s still a candidate’s market,” says Tom Quinn, vice president at staffing firm Adecco, while noting that the “big thing is a backing off among the big tech firms and in professional services.”

At his Wednesday press conference, Powell did emphasize that he still believes the economy can slow, bringing inflation along with it while also maintaining positive growth. This is the cherished “soft landing” that both the Fed and financial markets are hoping for instead of the recession that many economists are predicting for the latter part of 2023.