The labor market continued to show surprising resiliency in the early days of 2024, with initial jobless claims posting an unexpected drop last week.
Initial filings for unemployment insurance totaled 187,000 for the week ended Jan. 13, the lowest level since Sept. 24, 2022, the Labor Department reported Thursday. The total marked a 16,000 decline from the previous week and came in below the Dow Jones estimate of 208,000.
Labor strength has persisted despite attempts by the Federal Reserve to slow the economy, and the jobs market in particular, through a series of interest rate hikes. Central bank policymakers have linked the supply-demand mismatch between companies and the available labor pool as an ingredient that had sent inflation to its highest level in more than 40 years.
Along with the drop in weekly claims came an unexpected decline of 26,000 in continuing claims, which run a week behind. The total for continuing claims hit 1.806 million, below the FactSet estimate for 1.83 million.
“Employers may be adding fewer workers monthly, but they are holding onto the ones they have and paying higher wages given the competitive labor market,” said Robert Frick, corporate economist at Navy Federal Credit Union.
In other economic news Thursday, the Philadelphia Fed reported that its manufacturing index registered a reading of -10.6 for January, representing the difference between companies reporting growth against contraction. While the number marked an increase from the -12.8 posted in December, it was still below the Dow Jones estimate of -7.
The Philadelphia Fed gauge showed a decline in unfilled orders, delivery times and inventories. The employment index improved somewhat but was still negative at -1.8 while the prices paid and received measures both eased from December.
A third report Thursday showed some optimism for housing: Building permits totaled 1.495 million, a monthly increase of 1.9% and a bit above the 1.48 million estimate, according to the Commerce Department. However, housing starts totaled 1.46 million, a 4.3% monthly decline but better than the 1.43 million estimate.
The reports come a day after the Fed, in its periodic summary of economic conditions, reported mostly stagnant activity since late November.
According to the central bank’s Beige Book report, the economy broadly showed “little or no change in economic activity” during the period.
On employment, the report did note signs of a “cooling labor market,” with lower wage pressures. On housing, it said high interest rates were limiting activity, though the prospects of future easing from the Fed were raising hopes that the pace could accelerate.
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