Jobless claims are down, but businesses aren’t hiring aggressively, which could be a problem for the unemployment rate ……
In the second half of 2024, the U.S. labor market entered a new phase: hiring and layoffs are down.
We are in a ‘less hiring, less layoffs’ environment,” Bank of America Chief Economist Aditya Bhave said in a report Tuesday.In the spring of 2022, each unemployed person corresponded to two job openings. Now that number is only slightly above 1. In other words, there are fewer opportunities.”
Job openings fell in September to their lowest level since January 2021, and the employee turnover rate, a measure of employee confidence, fell to 1.9 percent from a revised 2 percent in August. The number of job openings per unemployed person was 1.09.
Nancy Vanden Houten, chief U.S. economist at the Oxford Economics Institute, said at the time that “the low level of the separation rate is consistent with job losses.”
Initial jobless claims fell to a seven-month low of 213,000 in the week ended Nov. 23, which was down from 215,000 the previous week and below economists’ forecasts of 216,000, new data released Wednesday by the Labor Department showed.
However, the number of continuing jobless claims – the number of people who have claimed unemployment benefits for at least two consecutive weeks – rose to 1.907 million last week, the highest level since November 2021.The number of people who have claimed unemployment benefits for at least two consecutive weeks rose to 1.907 million last week.
Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, wrote Wednesday that “the recent increase in continuing jobless claims broadly supports the view that this is high enough to cause the unemployment rate to continue to rise.”
The data showed that the U.S. unemployment rate stood at 4.1 percent in October, down from a peak of 4.3 percent this summer but up from 3.8 percent a year ago.
Not only has job growth slowed overall, but recent hiring trends have been concentrated in only a few sectors. Bank of America noted that three sectors – healthcare and education, leisure and hospitality, and government – have driven employment numbers over the past six quarters. Nonfarm payroll growth has averaged just 104,000 over the past three months. The team writes, “Hiring in other sectors has largely stagnated over the past few months.”
Despite the rise in the unemployment rate, Bhave and his team noted that overall layoffs remain low, writing, “While the labor market has moderated, it has not declined significantly.”
Bhave said, “A surge in layoffs creates a negative feedback loop between consumption and the labor market. However, layoffs are currently below pre-epidemic levels, which is consistent with low levels of initial jobless claims.”
The latest U.S. Consumer Confidence Index reached its highest level since July 2023 in November, driven by labor market optimism and future employment opportunities as layoffs remain minimal.
More broadly, the U.S. economy remains resilient, with U.S. GDP expanding again at a robust 2.8% pace in the third quarter despite high interest rates and sticky inflation, Bhave writes: “The U.S. economy may have weathered the effects of the Fed’s rate hikes.”
