US jobless claims data fuels rate-hike angst, Wall Street slides

Claims remain low despite high-profile layoffs in the technology sector and other industries highly sensitive to interest rates

jobless, US
(Photo: Bloomberg)
Reuters Washington
2 min read Last Updated : Feb 16 2023 | 10:37 PM IST
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, offering more evidence of the economy’s resilience despite tighter monetary policy.

Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 194,000 for the week ended Feb 11, the Labor Department. Main stock indexes fell more than 1 per cent.

Claims remain low despite high-profile layoffs in the technology sector and other industries highly sensitive to interest rates. 

The claims report also showed the number of people receiving benefits after an initial week of aid, increased 16,000 to 1.696 million during the week ending Feb 4.

Labor market resilience, marked by the lowest unemployment rate in more than 53 years, is one of the factors that have left financial markets anticipating that the Federal Reserve could continue raising interest rates.

Federal Reserve Bank of Cleveland President Loretta Mester said she saw a compelling case for rolling out another 50 basis point hike earlier this month and the US central bank has to be prepared to move interest rates higher if inflation remains stubbornly high.

“At this juncture, the incoming data have not changed my view that we will need to bring the fed funds rate above 5 per cent and hold it there for some time,” Mester said Thursday in remarks prepared for an event organized by the Global Interdependence Center and the University of South Florida Sarasota-Manatee. “Indeed, at our meeting two weeks ago, setting aside what financial market participants expected us to do, I saw a compelling economic case for a 50 basis-point increase, which would have brought the top of the target range to 5 per cent.

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Topics :US jobless claimsWall StreetFederal Reserve

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