The number of Americans filing for unemployment benefits rose more than expected last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and stock market selloff.
Signs of creeping employment weakness were also flagged by another report on Thursday showing a 218 percent jump in announced job cuts by U.S.-based employers in January. The planned layoffs were concentrated in the energy and retail sectors.
Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 285,000 for the week ended Jan. 30, the Labor Department said. Despite the increase last week, claims remained below 300,000, a level associated with strong labor market conditions, for the 48th straight week. That is the longest run since the early 1970s.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,000 to 284,750 last week. Economists had forecast claims rising to 280,000 in the latest week.
The rise in claims came as economic growth slowed to a 0.7 percent annual pace in the fourth quarter, held back by the headwinds of a strong dollar and faltering global demand.
A downturn in capital spending by energy companies, reeling from a collapse in oil prices, and inventory destocking by businesses are also constraining growth. At the same time, a stock market rout sparked by fears of a global economic slump has caused financial conditions to tighten.
In a separate report, global outplacement consultancy Challenger, Gray & Christmas said employers reported 75,114 planned job cuts last month, up from December’s 15-year low of 23,622. Last month’s planned layoffs are the largest since July.
Retailers announced plans to eliminate 22,246 jobs from their payrolls, the highest since January 2009. The retail cuts were dominated by Walmart (WMT.N), which announced plans to close 269 stores worldwide. The downtrodden energy sector announced plans to reduce its headcount by 20,246, up from 1,682 in December.
The reports come on the heels of weak data on manufacturing, export growth and consumer spending that have suggested the Federal Reserve will probably not raise interest rates in March. The U.S. central bank raised its benchmark overnight borrowing rate in December for the first time in nearly a decade.
U.S. stock index futures held losses after the data, while prices for Treasuries edged up. The dollar fell to a 15-week low against the euro and a two-week low against the yen.
While the claims data has no bearing on January’s employment report, which is scheduled to be released on Friday, as it falls outside the survey period, it fits in with perceptions of a deceleration in the pace of job growth.
According to a Reuters survey of economists, nonfarm payrolls are expected to have increased 190,000 last month after surging 292,000 in December. The unemployment rate is forecast holding steady at a 7-1/2-year low of 5 percent.
In another report, the Labor Department said nonfarm productivity, which measures hourly output per worker, declined at a 3.0 percent annual rate, the biggest drop since the first quarter of 2014, after rising at a 2.1 percent rate in the third quarter.
The weak productivity reflects the sharp slowdown in gross domestic product growth during the quarter and an acceleration in the pace of hiring. Nonfarm payrolls rose by an average 284,000 jobs per month.
Productivity grew 0.6 percent in 2015, the smallest increase since 2013. Productivity increased at an annual rate of less than 1.0 percent in each of the last five years.
The average annual rate of productivity growth from 2007 to 2015 is 1.2 percent, well below the long-term rate of 2.1 percent from 1947 to 2015. Economists blame softer productivity on a lack of investment, which they say has led to an unprecedented decline in capital intensity.
In the fourth quarter, unit labor costs, the price of labor per single unit of output, advanced at a 4.5 percent pace, the fastest rate in a year. Unit labor costs increased at a 1.9 percent rate in the third quarter and rose 2.4 percent in 2015, the largest gain since 2007.
Source: Reuters (Reporting by Lucia Mutikani; Editing by Paul Simao)