The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, showing the labor market remains strong despite higher interest rates.
Initial claims for state jobless benefits fell 15,000 to a seasonally adjusted 190,000 for the week ended Jan. 14, the Labor Department said on Thursday. Economists polled by Reuters had forecast 214,000 claims for the latest week.
Part of the sharp drop in claims may reflect the ongoing challenge of adjusting data for seasonal fluctuations earlier in the year.
Through seasonal fluctuations, jobless claims have remained at levels consistent with a strong labor market, although layoffs have increased in the technology industry and interest rate-sensitive sectors such as finance and housing.
Microsoft Corp said it would cut 10,000 jobs, joining rival Amazon.com which this month began planning to cut 18,000 jobs. Economists caution against reading job cuts in the tech sector as a sign of a deterioration in labor market conditions, arguing that these companies are overhiring during the COVID-19 pandemic.
Outside the tech industry, economists say companies are generally reluctant to lay off workers after struggling to find workers during the pandemic. They expect companies to reduce hiring before resorting to exits.
In fact, the Federal Reserve's Beige Book reported on Wednesday that "many firms are hesitant to lay off workers even as demand for their goods and services slows and plan to reduce the number of workers through layoffs if necessary."
Claims fell between the December and January survey weeks. The economy added 223,000 jobs in January.
