Initial jobless claims spike to highest level since December

REAL ECONOMY BLOG | March 09, 2023

Authored by RSM US LLP

New claims for jobless benefits last week came in hotter than expected at 211,000, significantly higher than the 190,000 of the previous week, the Department of Labor reported on Thursday.

The increase was in line with expectations following a large number of high-profile layoff announcements this year, as well as signs that the economy is slowing.

Still, the number of claims last week remained below the average pre-pandemic level of 218,000 in 2019.

Although considered a proxy for layoffs, new claims for jobless benefits have not necessarily reflected the real trend in layoffs in previous months.

According to the Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics, layoffs have risen since mid-2021 from an average of 1.3 million each month to 1.7 million in January. That is more consistent with the increasing number of layoff announcements.

But with labor demand remaining robust, laid-off workers in many cases have found new jobs without having to apply for jobless benefits. That has kept the number of new jobless claims near its recent historical lows.

While last week’s claims data suggests a cooling in the labor market, we remain cautious against putting too much emphasis on one week’s number.

Our preferred measure for the long-term trend in claims continued to inch down to 201,000 from 202,000.