U.S. Weekly Jobless Claims Drop To Nine-Month Low; Productivity Gains Speed  

• The number of Americans filing new claims for unemployment benefits dropped to a nine-month low last week as the labour market remains resilient despite higher borrowing costs and mounting fears of a recession this year. The surprise decline in weekly jobless claims reported by the Labour Department on Thursday raised cautious optimism that the economy could skirt a recession or just experience a shallow and short downturn.
• Federal Reserve Chair Jerome Powell told reporters on Wednesday that "the economy can return to 2% inflation without a really significant downturn or a big increase in unemployment." The U.S. central bank raised its policy rate by 25 basis points to the 4.50%-4.75% range and promised "ongoing increases" in borrowing costs.
• Initial claims for state unemployment benefits dropped 3,000 to a seasonally adjusted 183,000 for the week ended Jan. 28, the lowest level since April 2022. Economists polled by Reuters had forecast 200,000 claims for the latest week. Outside the technology industry and interest-rate-sensitive sectors like housing and finance, employers have been reluctant to lay off workers after struggling to find labour during the pandemic, and also because they are optimistic economic conditions will improve later this year.
• Despite labour market tightness, wage inflation is slowing and could continue doing so as a third report from the Labour Department showed worker productivity accelerating at a 3.0% annualized rate in the fourth quarter, the fastest in a year, after rising at a 1.4% pace in the third quarter. Stocks on Wall Street were trading higher. The dollar rose against a basket of currencies, and U.S. Treasury yields fell.

(Source: Reuters)