The number of Americans filing new applications for unemployment benefits fell more than expected last week, pointing to low layoffs though job opportunities are becoming scarce for those who are out of work.
Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 207,000 for the week ended Jan. 25, the Labor Department said on Thursday. Economists polled by Reuters had forecast 220,000 claims for the latest week.
While claims remain at levels consistent with a labor market that continues to plod along, consumers are becoming less optimistic about their prospects of finding employment in the event of a layoff.
A Conference Board survey this week showed the share of consumers reporting that jobs were “plentiful” fell to a four-month low in January. The proportion that viewed jobs as “hard-to-get” was the highest since October.
Companies have scaled back on hiring in response to still tight monetary policy and employers are also waiting to see how the policies of President Donald Trump’s new administration, including tax cuts, tariffs and deportations, shape up before adding headcounts.
Economists have deemed these policies inflationary. The Federal Reserve on Wednesday left its benchmark overnight interest rate in the 4.25%-4.50% range, having reduced it by 100 basis points since September, when the U.S. central bank launched its policy easing cycle.
In its policy statement, the Fed removed a reference that inflation “has made progress” towards the Fed’s 2% goal.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 42,000 to a seasonally adjusted 1.858 million during the week ending Jan. 18, the claims report showed. The elevation in the so-called continuing claims underscores diminishing job opportunities.
Continuing claims data covered the period during which the government surveyed households for January’s unemployment rate. The jobless rate was at 4.1% in December.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
