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This commentary is written by PNC Chief Economist Gus Faucher.
Initial claims for unemployment insurance rose by 13,000 in the week ending February 4 but remain extremely low. The four-week moving average of initial claims fell.
- Continuing claims rose slightly in the week ending January 28, to 1.688 million.
- Both initial and continuing claims are extremely low in early 2023.
- The labor market remains historically strong.
Initial claims for unemployment insurance rose in the week ending February 4, to 196,000. Claims for the prior week were unrevised at 183,000. This was the first increase in claims since December.
The four-week moving average of claims, which smooths out some of the volatility, fell to 189,000 in the week ending February 4, from 192,000 in the week ending January 28. This is the lowest the four-week moving average has been since April 2022, and is among the lowest the four-week moving average has been since the data began in the late 1960s.
Continuing claims for unemployment insurance were 1.688 million in the week ending January 28, up from 1.650 million the previous week. The four-week moving average of continuing claims rose to 1.665 million in the week ending January 28, up from 1.650 million the week ending January 21, but remains very low on an historical basis.
Initial unemployment insurance claims rose slightly in the week ending February 4, and continuing claims in the week ending January 28, but both measures remain extremely low and indicate ongoing strength in the labor market. Although company layoff reports are become more common, those layoffs are not yet showing up in the unemployment insurance data. Some of this may be timing; if the company offers severance the claims are not counted until the severance expires. But even so the job market remains remarkably strong. Initial claims are near their lowest levels in since the late 1960s, and continuing claims, after increasing slightly at the end of last year, are now falling and extremely low on an historical basis.
The US economy added a very strong 517,000 jobs in January, well above expectations. Although there are reasons to think that the January jobs report may have overstated the strength in the labor market, there is no question but that the job market is very strong. Hiring remains robust in early 2023 and businesses continue to have difficulties in finding workers. The unemployment rate fell 3.4% in January, the lowest it has been since 1969.
Unemployment should increase in 2023 as economic growth slows and then the economy falls into recession later this year, the result of a rapid increase in interest rates due to Federal Reserve monetary tightening to slow inflation.
About the author: Prior to joining PNC in December 2011, Faucher worked for 10 years at Moody’s Analytics, where he was a director and senior economist. Previously, he worked for six years at the U.S. Treasury Department, and taught at the University of Illinois at Urbana-Champaign. He serves on the board of directors of The Economic Club of Pittsburgh - the local chapter of National Association of Business Economics (NABE). He is also co-chair of the Financial Roundtable of NABE. Faucher earned a Ph.D. in economics from the University of Pennsylvania and a B. A. in economics from Cornell University.