The U.S. labor market could be cooling faster than expected. It turns out that initial unemployment claims rose more than expected in the last week of January 2015. The development has stoked fears that the U.S. job market could be coming under pressure amid crude oil collapse and tepid demand.
New claims jump by 8,000
In the week that ended January 30, new jobless claims increased by 8,000 from the previous week to perch at 285,000, according to the U.S. Labor Department. The agency previously quoted new jobless claims in the prior week at 278,000 but revised it to 277,000.
The increase of unemployment benefits signals a rise in the pace of layoffs. There could be even more pressure to come on the U.S. job market. It has emerged that the number of job cuts announced in January increased 218% from the previous month and more job losses could follow as companies struggle with hostile operating environments.
Sectors losing most jobs
Retailer and energy sectors appear to be leading in job losses. The lower crude prices have left oil companies struggling with mounting expenses amid falling margins. A significant number of oil companies have announced layoffs or put off capital projects to preserve cash and those actions are having a negative impact on the lobar market. Retailers are also dealing with soft demand for their merchandise, causing them to reduce inventory and trim jobs.
Despite the pressures witnessed in the U.S. job market in the last week of January, the U.S. labor market remains fairly strong. Filing for new unemployment benefits have remained below 300,000 for the most part of 2015. As for the four-week moving average, the initial jobless claims have hovered around 284,750. That suggests an increase of about 2,000 over a year ago, when four-week moving average was 289,000.
Even as signs of creeping labor weakness emerge, there appears to be no alarm considering that the U.S. job market has remained fairly strong in the recent times.