New filings for jobless benefits inched down by 1,000 last week from 218,000, remaining near their historical lows, according to government data released Thursday.
With the data on job openings coming out hotter than expected this week, the imbalance between labor demand and supply continued to keep layoffs below the pre-pandemic level despite employment having fully recovered.
That suggests that even when the economy has slowed down noticeably, businesses have been keeping their workers a lot longer. At the same time, laid-off workers have been able to find new jobs relatively quickly without having to file for unemployment benefits.
Our preferred measure for jobless claims, the 13-week moving average, continued to dip closer to the pre-pandemic level.
Without an improvement in labor supply—mainly from the labor force participation rate—we should expect layoffs to remain low for quite some time until the economy enters a recession.
The data release was only one day ahead of the highly anticipated jobs report, which will not only tell how strong the labor market was in October but also might potentially affect the Federal Reserve’s rate decision in December.
While the Fed has signaled that a slowdown in rate hikes might come soon, another labor report with strong wage growth could change that outlook.
To be clear, there has been no sign of a wage-price spiral as of yet. But the clock is ticking as inflation persists. The risks of wage inflation baked into contract negotiations and hiring decisions are only growing.