- Weekly jobless claims increase by 21,000 to 211,000
- The average number of claims over four weeks rises from 4,000 to 197,000
- Continuing claims jump 69,000 to 1,718 million
WASHINGTON, March 9 (Reuters) – The number of Americans filing new claims for unemployment benefits rose the most in five months last week, but the underlying trend remained consistent with a tight labor market.
Part of the larger-than-expected increase in claims reported by the Labor Department on Thursday reflected an increase in claims in New York state, which some economists attributed to a midwinter school recess of Feb. 20-24. There was also a surge in California filings.
“Even accounting for the latest increase, jobless claims are exceptionally low by historical standards, underlining how tight the labor market still is,” said Michael Pearce, chief US economist at Oxford Economics in New York.
“It’s possible this is an early sign that the spike in announced layoffs is starting to trickle down into job cuts, but not all announced layoffs translate into job cuts.”
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Initial claims for state unemployment benefits rose by 21,000 to a seasonally adjusted 211,000 for the week ending March 4. That was the biggest increase since October and lifted applications to a two-month high. Still, claims remained well below the 300,000 mark associated with a recession.
Economists polled by Reuters had forecast 195,000 claims for the past week. The four-week moving average for new claims, a better measure of job market trends because it smoothes out weekly fluctuations, climbed 4,000 to 197,000 last week.
The number of claims had remained below 200,000 for seven consecutive weeks, indicating that the high-profile job cuts in the technology sector had not had a material impact on the job market.
Economists previously argued that seasonal adjustment factors, the model the government uses to extract seasonal fluctuations from the data, could hold back claims.
The seasonal adjustment factors for 2023 will be updated at the end of March. Goldman Sachs believed residual seasonality accounted for about half of last week’s claims increase.
“Seasonal adjustment issues have put increasing downward pressure on early claims over the past few months and that pressure will begin to ease in a few weeks, although annual revisions to the seasonal factors in early April could potentially smooth out the seasonal distortions,” he said. Goldman Sachs in a note.
Unadjusted claims skyrocketed from 35,357 to 237,513 last week. They got a boost of 16,363 in New York and an increase of 10,489 in California. There were also notable increases in applications in Kentucky, Oregon and Ohio. But claims in Rhode Island and Massachusetts dropped significantly.
According to Lou Crandall, chief economist at Wrightson ICAP, the surge in New York State claims “was a predictable response to last week’s midwinter school break and will likely be reversed in next week’s report.” Crandall viewed California’s rise in claims as “probably more persistent” and expected total claims to retreat to the 195,000-200,000 range when this week’s data is released next Thursday.
Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. US Treasury bond prices were mixed.
SKILLED WORKERS ARE SCARE
Data from Wednesday showed there were 1.9 job openings for every unemployed person in January. The Fed’s “Beige Book” report, also released on Wednesday, described the job market as “solid” in February, noting “scattered reports of layoffs” and that “finding workers with the desired skills or experience remained a challenge “.
With a continued tight labor market, strong inflation numbers and robust consumer spending in January, Fed Chairman Jerome Powell told lawmakers this week that the U.S. central bank should probably raise interest rates more than expected.
According to the CME Group’s FedWatch tool, financial markets priced in a 50 basis point rate hike at the Fed’s March 21-22 policy meeting.
Since last March, the Fed has raised its policy rate by 450 basis points from near zero to the current range of 4.50%-4.75%.
The number of people receiving benefits after a first week of aid, a proxy for hiring, rose by 69,000 to 1.718 million in the week ending Feb. 25, the claims report also found. So-called ongoing claims remain low, suggesting that some laid-off workers could easily find new employment.
The claims data does not affect the February employment report, which is scheduled to be released on Friday, as it falls outside the survey period.
Nonfarm payrolls are likely to have risen by 205,000 jobs in February, following a rise of 517,000 in January, according to a survey of Reuters economists. The unemployment rate is expected to remain unchanged at a 53-1/2 year low of 3.4%.
However, the labor market is cooling in the margins. A report from global outplacement firm Challenger, Gray & Christmas on Thursday found that job cuts announced by US-based employers fell 24% in February to 77,770. However, planned layoffs were 410% higher compared to the same period last year. It was also the highest February total since 2009.
Job losses were concentrated in the technology industry, which accounted for 28% of the layoffs announced last month. Retailers and financial institutions are also reducing their workforce.
“With 1.9 job openings per job seeker, laid-off workers appear to be finding new jobs quickly, which could make unemployment dynamics very different than in the past if layoffs continue to increase,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York. York. York.
Reporting by Lucia Mutikani; Edited by Chizu Nomiyama, Andrea Ricci and Paul Simao
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