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% 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% 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), 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.