JPMorgan Chase has indicated that while the latest labor market data appears concerning at first glance, including a spike in initial jobless claims and layoff announcements reaching their highest level for January since 2009, these figures are significantly distorted by seasonal factors, extreme weather, and potential double-counting in the statistics.
According to the most recent data, initial jobless claims in the United States surged to 231,000 in the week ending January 31st, up from 209,000 the previous week. Excluding weeks heavily skewed by seasonal factors around Thanksgiving, this marks the highest level since mid-October of last year. While this jump is likely to unsettle market sentiment, JPMorgan suggests it is not a cause for significant concern.
Analysis from the bank's North America Economic Research team, in a report dated February 5th, shows that this increase was largely anticipated. Residual seasonal factors indicate that claims typically begin to trend upward during this period. A more critical short-term disruption came from weather—Winter Storm Fern and the accompanying severe cold likely temporarily boosted the number of people filing for unemployment benefits during the survey week. Such weather-related volatility is usually transient and does not signal a fundamental weakening in labor demand.
JPMorgan points out that looking beyond the alarming headlines created by this "noise," the underlying market fundamentals have not structurally deteriorated. Investors should not be misled by surface-level data volatility into making panic-driven selling decisions. Both the rise in initial claims and layoffs by tech giants, when adjusted for special factors, do not negate the underlying resilience of the U.S. labor market. Current data does not provide conclusive evidence of an impending economic recession.
Data on continuing jobless claims offers a more stable perspective. In the week ending January 24th, continuing claims rose slightly to 1.844 million from 1.819 million the prior week. Despite weekly fluctuations, JPMorgan still views this as a "good number."
More importantly, the four-week moving average, which smooths out short-term volatility, is currently at its lowest level since October 2024. As JPMorgan has previously discussed, a decline in continuing claims is a positive signal, indicating that the ability or willingness of the unemployed to find new work remains intact. Although improvement in this metric may not immediately translate into a lower unemployment rate, it effectively counters the narrative of a rapidly deteriorating labor market.
The Challenger layoffs report for January, released the same morning, captured attention with a startling headline: announced layoffs reached 108,000, the highest January total since 2009. However, JPMorgan states bluntly that this characterization of severity is misleading. While technically accurate, a comparison with historical charts shows this January's figure is more aligned with recent January readings and is far removed from the conditions seen during the 2009 crisis.
A deeper look into the data reveals that of the total 108,000 layoffs, 30,000 were from UPS and 16,000 from Amazon. The layoffs at UPS stemmed from the company reducing its shipping business for Amazon. While Amazon announced layoffs, these were primarily concentrated in office roles, and some lost logistics positions might be replenished later.
More critically, the report likely involves "double-counting" of Amazon's layoff figures. Amazon had already announced a cumulative target of 30,000 laybacks as early as last October. The Challenger report for October showed 33,000 tech sector layoffs, which likely included the majority of Amazon's initial wave. Now, the 16,000 figure counted again in January, which is part of the original 30,000 target, is being treated as new layoffs. This statistical approach artificially inflates the scale of January's layoffs, making the situation appear more severe than it actually is.
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