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Jobless Claims Fall in Face of Ongoing Layoffs

Jobless Claims Fall in Face of Ongoing Layoffs

New Department of Labor data shows a drop in initial applications for unemployment in the United States.

Unemployment claims fell by 12,000 to 201,000 for the week ending Feb. 17, the lowest level in more than a month, the department said in a Thursday (Feb. 22) news release.

Also dropping were continuing claims, often seen as an indicator of the number of people getting ongoing unemployment benefits. That figure fell to 1.86 million in the week ending Feb. 10, another monthly low.

The figure fell short of economists’ expectations. For example, experts polled by Reuters had forecast 218,000 claims for the latest week.

“The surprise drop in jobless claims — coming just after a spate of layoff announcements — adds to lingering doubts about how tight the labor market really is,” said Eliza Winger, an economist for Bloomberg Economics. “Drilling down to state-level data, we see that the breadth of labor-market weakness has increased — implying that conditions in the labor market are less sanguine than they appear on the surface.”

The past few weeks have seen several companies announce job cuts, including in the tech industry, which has eliminated 42,000 so far this year, according to Layoffs.fyi, which monitors unemployment in the sector.

Among these companies are PayPal, eBay, Microsoft, Snap and Block, which on Thursday said it would cut 112 jobs next month as part of its previously announced cost-cutting measures.

The company began layoffs in January and aims to reduce its workforce from over 13,000 to 12,000 by the end of this year.

Jack Dorsey, co-founder of Block, announced the cuts in a November letter to shareholders, saying: “We are creating an absolute cap on the number of people we have at the company, held firm at 12,000 people until we feel the growth of the business has meaningfully outpaced the growth of the company.”

The moves are happening as tech companies assess their staffing levels and conclude that “we’ve got a bunch of dead wood. And if we had a leaner organization we can do more,” Jefferies analyst Brent Thill said earlier this month.

“The layoffs are going to continue, and it may get worse,” Thill added. “It’s become contagious.”