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Rising U.S. Layoffs Suggest Labor Market May Be Pulling Back

The number of Americans filing for unemployment benefits rose more than expected last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and stock market selloff.

Signs of creeping employment weakness were also flagged by another report on Thursday showing a 218 percent jump in announced job cuts by U.S.-based employers in January. The planned layoffs were concentrated in the energy and retail sectors.

"The future is somewhat darker ... the labor market may be past its peak for this cycle. It looks like the labor market has scaled back its rapid advance last month," said Chris Rupkey, chief economist at MUFG Union Bank in New York.

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Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 285,000 for the week ended Jan. 30, the Labor Department said.

Still, claims remained below 300,000, a level associated with strong labor market conditions, for the 48th straight week. That is the longest run since the early 1970s.

The rise in layoffs came amid a slowdown in economic growth. The economy grew at only a 0.7 percent annual pace in the fourth quarter, held back by the headwinds of a strong dollar and faltering global demand.

A downturn in capital spending by energy companies, reeling from a collapse in oil prices, and inventory destocking by businesses are also constraining growth. At the same time, a stock market rout sparked by fears of a global economic slump has caused financial market conditions to tighten.

In a separate report, global outplacement consultancy Challenger, Gray & Christmas said employers reported 75,114 planned job cuts last month, up from December's 15-year low of 23,622. Last month's planned layoffs were the largest since July.

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