US Job Market: Unemployment Claims Surge, Hiring Slows
The US labor market continues to face challenges, with data indicating that workers are taking longer to find jobs. Continuing weekly unemployment insurance claims rose to 1.89 million in the week ending Jan. 25, near their highest level in three years.
Economists note that while new unemployment claim filings remain at low levels, the elevated level of continuing claims suggests increasing difficulty for unemployed individuals to secure new employment.
Ryan Sweet, chief US economist at Oxford Economics, stated that the labor market perception depends on employment status, with conditions being more challenging for those seeking work.
Nela Richardson, chief economist at ADP, echoed this view, citing data from her firm's research. She highlighted that job seekers with college degrees are also facing greater difficulty finding employment.
The Federal Reserve has acknowledged the heightened challenges in the labor market. Fed Chair Jerome Powell noted that while the hiring environment remains low, job finding rates have decreased.
Data from the Job Openings and Labor Turnover Survey (JOLTS) shows that the hiring rate held steady at 3.4% in December, near its lowest levels in a decade. Similarly, the job openings rate has declined to 4.5% in December, approaching its lowest point since the labor market's pandemic recovery.
Powell, however, described the labor market as "broadly stable." However, economists caution that concerns about tariffs and other policies may further impact job prospects.
Investors are closely monitoring the January jobs report, expected at 8:30 a.m. ET on Friday. The report is projected to show an addition of 170,000 jobs, lower than December's 256,000. The unemployment rate is expected to remain at 4.1%.
The report may provide further insights into the softening labor market conditions, although economists anticipate that any weakening may not be alarmingly significant.