New filings for jobless claims inched up by 1.8% last week to 230,000, remaining above the pre-pandemic level for the fifth week in a row.
There is no doubt that the labor market has been slowing down as more companies reassess their hiring plans. It has also become clear that the bottom in initial jobless claims as well as continuing claims has passed.
There were 1.7 million unemployed workers receiving continuing unemployment benefits for the week ending Nov. 25, significantly higher than the average of 1.4 million from May to September. That is a sign that workers have had to stay on unemployment benefits for longer.
While more layoffs are expected, the data still implies that the economy is not at the point of a recession yet.
The new claims number, released by the Labor Department on Thursday, is substantially below the 350,000 that we consider the threshold for a recession. Continuing claims also remain below the pre-pandemic level.
Note that claims data is often noisy during the holiday season. We should get a better sense of the layoff picture in January and February.
The takeaway
It is reasonable to expect claims for unemployment benefits to pick up as the economy slows. But given the significant imbalance between labor demand and supply, we do not expect a spike anytime earlier than the second half of the year, once the full impact of rate hikes is felt.
