US Unemployment Remains Low Despite Massive Layoffs

Last week in the US, jobless claims increased; despite layoffs, the market in some companies is tight and widening economic uncertainty.

The Labor Department said Initial jobless claims, a proxy for layoffs, rose by 4,000 to a seasonally adjusted 230,000 last week. They were approaching the 2019 weekly average of around 218,000 when the job market was also strong.

Since the end of February, claims for people seeking unemployment benefits have risen to their highest level, although they also remain historically low. Continuing claims increased by 62,000 to 1.67 million in the week ending Nov. 26.

The slow rise in continued jobless claims indicates that workers are staying on unemployment insurance longer rather than finding a new job right away, said Jesse Wheeler, an economic analyst at Morning Consult. People who lose their jobs find it more difficult to find a new job.”

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The latest report comes as the labour market remains tight, with continued job growth and low unemployment. However, several major companies have recently laid off workers or stopped hiring.

The Department of Labor reported last Friday that Monthly job earnings remain strong. Employers added 263,000 jobs in November, staying close to the substantial gains of the previous three months when they averaged 282,000 a month. Median wages for 2021 grew by 5% in November from a year earlier, staying above the pre-pandemic pace of roughly 3%.

The technology and media industries are where layoffs have been most concentrated, and also in sectors such as housing that are sensitive to interest rates.

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PepsiCo Inc. is laying off headquarters workers, joining other companies that cut white-collar jobs. In North America, the cuts will affect beverage and packaged food business office workers.

Media and entertainment studios, including Warner Bros. Discovery Inc.’s CNN and Paramount Global’s television production units, have also announced layoffs.

The layoffs have not generated an increase in claims. Workers can opt for a new job in a still-tight job market or forgo filing a claim.

The four-week moving average of weekly claims, which smooths out volatility, increased by 1,000 to a seasonally adjusted 230,000.

The number of current job offers exceeds the number of unemployed people.

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