The number of Americans filing new claims for unemployment benefits increased to a two-month high late March amid a gradual easing in labour market conditions.

The weekly claims report from the Labor Department on Thursday (Mar 4, 2024) also showed fewer people remaining on jobless rolls towards the end of March, suggesting that laid-off workers continued to find work, though not as easily as two years ago.

“The labour market remains very strong,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh.

Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 221,000 for the week ended March 30, the report showed. Economists polled by Reuters had forecast 214,000 claims in the latest week. Claims had bounced around between 210,000 and 212,000 for much of March.

Some economists attributed the larger-than-expected rise in claims to an early Easter this year, which could have thrown off the model that the government uses to strip seasonal fluctuations from the data.

Unadjusted claims increased from 2,455 to 196,376 last week. There were significant rises in filings in California, Iowa, Illinois and Pennsylvania.

These offset notable declines in Texas, Missouri and Georgia.

“We won’t infer anything from one week’s rise in claims, particularly since it occurred around a holiday when claims data can be noisier than usual,” said Nancy Vanden Houten, lead US economist at Oxford Economics in New York.

Though layoffs increased to a 14-month high in March, job cuts were little changed compared to the same period last year.

There were 1.36 job openings for every unemployed person in February compared to 1.43 in January, government data showed this week. Worker shortages persist in industries like construction.

Labour market resilience is anchoring the economy, with gross domestic product increasing at a brisk 3.4% annualised rate in the fourth quarter.

Growth estimates for the first quarter are as high as a 2.8% pace. That strength, combined with still-high inflation, could see the Federal Reserve delaying much-anticipated interest rate cuts this year.

Fed chair Jerome Powell reiterated on Wednesday (Mr 3. 2024) that the US central bank has time to deliberate over its first rate cut, in a nod to the economy’s stamina and high inflation.

Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.

Solid jobs gains expected

The number of people receiving benefits after an initial week of aid, a proxy for hiring, dropped 19,000 to 1.791 million during the week ending March 23, the claims report showed.

The claims data have no bearing on March’s employment report, scheduled to be released on Friday, as they fall outside the survey period. Non-farm payrolls likely increased by 200,000 jobs last month after rising by 275,000 in February, according to a Reuters survey.

The unemployment rate is forecast unchanged at 3.9%. – Reuters


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