US weekly jobless claims at 3-month high; equipment spending resilient

The number of Americans filing new claims for jobless benefits increased to a three-month high last week amid rising layoffs in the technology sector, but that likely does not suggest a material shift in labor market conditions, which remain tight.

Economists urged against reading too much into the rise in weekly unemployment benefit claims reported by the Labor Department on Wednesday, noting the data tend to be volatile at the start of the holiday season as companies temporarily close or slow hiring. Claims remain in line with pre-pandemic levels.

"It's certainly possible that layoffs are helping to boost increases in claims filings," said Isfar Munir, an economist at Citigroup in New York. "While this could be interpreted as evidence of a softening labor market, we would caution against this. The holiday season introduces a great deal of volatility into this data. It may be hard to disentangle the impact of seasonal patterns versus layoffs until January."

Initial claims for state unemployment benefits rose 17,000 to a seasonally adjusted 240,000 for the week ended Nov. 19, the highest level since mid-August. Economists polled by Reuters had forecast 225,000 claims for the latest week.

Moody's Analytics estimates the break-even level for claims at around 270,000. The jobs market has remained resilient in the face of the Federal Reserve's most aggressive interest rate-hiking cycle since the 1980s aimed at curbing high inflation by dampening demand in the economy.

Economists say massive swings because of the COVID-19 pandemic had distorted the seasonal adjustment factors, the model that the government uses to strip out seasonal fluctuations from the data.

According to Brean Capital Senior Economic Advisor Conrad DeQuadros, seasonally adjusting the raw claims data with the average of the adjustment factors for 2005 and 2011, years that the calendar aligned within 2022, would have resulted in claims rising only 3,000 last week.

MG