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The labor market continued to show surprising resilience in the early days of 2024, with initial jobless claims recording an unexpected decline last week.
Initial claims for unemployment insurance totaled 187,000 for the week ending January 13, the lowest level since September 24, 2022. The Ministry of Labor reported Thursday. The total represented a decline of 16,000 from the previous week and came in below the Dow Jones estimate of 208,000.
The labor force has persisted despite the Federal Reserve's attempts to slow the economy, and the labor market in particular, through a series of interest rate hikes. Central bank policymakers have linked the mismatch between supply and demand between firms and the pool of available labor as a factor that has pushed inflation to its highest level in more than 40 years.
Along with the decline in weekly claims came an unexpected drop of 26,000 in continuing claims, which were delayed by a week. Continuing claims totaled 1.806 million, lower than the FactSet estimate of 1.83 million.
“Employers may be adding fewer workers each month, but they are hanging on to the workers they have and paying higher wages given the competitive labor market,” said Robert Frick, corporate economist at Marine Federal Credit Union.
In other economic news on Thursday, the Federal Reserve Bank of Philadelphia reported Manufacturing index It recorded a reading of -10.6 for January, which represents the difference between companies reporting growth versus contraction. While the number represents an increase from the -12.8 recorded in December, it is still below the Dow Jones estimate of -7.
The Philadelphia Fed's gauge showed declines in unfilled orders, delivery times and inventories. The employment index improved somewhat but remained negative at -1.8 while prices paid and received declined from December.
A third report on Thursday showed some optimism on housing: Building permits totaled 1.495 million, a monthly increase of 1.9% and slightly above estimates of 1.48 million. According to the Ministry of Commerce. However, the total number of home starts was 1.46 million, a monthly decline of 4.3% but better than estimates of 1.43 million.
The reports come a day after the Federal Reserve, in its periodic summary of economic conditions, reported mostly stagnant activity since late November.
According to statements by the Central Bank Beige book reportThe economy overall showed “little or no change in economic activity” during this period.
Regarding employment, the report noted signs of a “cooling labor market,” with lower wage pressures. On housing, he said high interest rates are limiting activity, although the prospect of future easing from the Fed raises hopes for an acceleration in the pace.
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