US weekly jobless claims remain at low level

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The number of Americans filing new claims for unemployment benefits was unchanged at a low level last week, pointing to continued labor market strength.

Labor market resilience, which is driving the economy, together with elevated inflation have led financial markets and some economists to expect that the Federal Reserve could delay cutting interest rates until September. A few economists doubt that the U.S. central bank will lower borrowing costs this year.

“Overall, layoffs remain low. We expect a continuation of the current trend, with a further adjustment in the labor market coming from a moderation in hiring rather than a surge in firings,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 212,000 for the week ended April 13, the U.S. Labor Department said on Thursday.

Economists polled by Reuters had forecast 215,000 claims in the latest week. Claims have been bouncing around in a 194,000-225,000 range this year.

Unadjusted claims declined 6,756 to 208,509 last week. Filings in California jumped by 3,063. There were also notable increases in claims in Connecticut, Georgia and Oregon.

These were more than offset by a decline of 4,551 in filings in New Jersey. Claims in the state had jumped in the prior week, a move that was blamed on layoffs in the accommodation and food services, transportation and warehousing, and public administration industries. There were also significant decreases in filings in Minnesota, Ohio, Pennsylvania and Wisconsin.

Fed Chair Jerome Powell backed away on Tuesday from providing any guidance on when rates might be cut, saying instead that monetary policy needed to be restrictive for longer. Financial markets initially expected the first rate cut to come in March, but the timing got pushed back to June and now to September as data on the labor market and inflation continued to surprise on the upside in the first three months of the year.

The U.S. central bank has kept its policy rate in the 5.25%-5.50% range since July. It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.

The claims data covered the period during which the government surveyed businesses and other establishments for the nonfarm payrolls component of April’s employment report. Claims were unchanged between the March and April survey weeks. The economy added 303,000 jobs in March.

The Fed’s latest “Beige Book” report on Wednesday described employment as rising at a “slight pace overall” since late February, adding that “several districts reported improved retention of employees, and others pointed to staff reductions at some firms.”

It also noted that even as labor supply has improved, “many districts described persistent shortages of qualified applicants for certain positions, including machinists, trades workers and hospitality workers.”

Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the state of the labor market in April. The so-called continuing claims edged up 2,000 to 1.812 million during the week ending April 6, the claims report showed.

Though still low by historical standards, the slightly elevated level of continuing claims suggest it could be taking longer for some unemployed workers to land new jobs.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow