U.S. labor market still tight; housing mired in recession

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The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to another month of solid job growth and continued labor market tightness despite efforts by the Federal Reserve to cool demand for workers.

Economists cautioned against reading the technology layoffs as flagging a deterioration in labor market conditions, arguing that these companies were right-sizing after over-hiring during the COVID-19 pandemic.

Stocks on Wall Street fell. The dollar was steady against a basket of currencies. U.S. Treasury yields rose.The Fed last year raised its policy rate by 425 basis points from near zero to the current 4.25%-4.50% range, the highest since late 2007. In December, it projected at least an additional 75 basis points of hikes in borrowing costs by the end of 2023.

Claims decreased between the December and January survey weeks. The economy added 223,000 jobs in December. A separate report from the Commerce Department on Thursday showed single-family homebuilding rebounded in December, but permits for future construction dropped to more than a 2-1/2-year low, pointing to weakness ahead as tighter monetary policy strangles the housing market.Single-family housing starts, which account for the bulk of homebuilding, increased 11.3% to a seasonally adjusted annual rate of 909,000 units last month, the highest level since August.

 

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