US weekly jobless claims fall to lowest level since 1969

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FILE PHOTO: A woman wearing a protective face mask walks during a funeral procession in the Chinatown neighborhood of the borough of Manhattan in New York City, the United States, amid the coronavirus disease (COVID-19) pandemic, on February 10, 2022. REUTERS/Shannon Stapleton

March 24, 2022

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new jobless claims fell to a 52-1/2-year low last week, while unemployment figures continued to shrink, pointing to a rapidly easing slack in the labor market that will continue to fuel wage inflation will.

Strength in the job market reported by the Labor Department on Thursday could prompt the Federal Reserve to hike interest rates by half a percentage point at its next policy meeting in May. Federal Reserve Chair Jerome Powell said on Monday the Federal Reserve needs to act “quickly” to raise interest rates and potentially more “aggressively” to prevent high inflation from taking hold.

The Fed raised interest rates by 25 basis points last week, the first hike in more than three years.

“US companies don’t lay off employees because they recognize the tremendous challenges they face in filling vacancies,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

“If initial claims remain below 200,000 for a period of time, that will raise a red flag with the Fed.”

Initial jobless claims fell 28,000 to a seasonally adjusted 187,000 for the week ended March 19, the lowest since September 1969. Economists polled by Reuters had forecast 212,000 claims for the previous week.

The drop in claims over the past week has been widespread, with large declines in California, Michigan, Kentucky and Illinois.

Claims have receded in part as COVID-19 restrictions were lifted across the country amid a massive drop in coronavirus cases. They have fallen from a record high of 6.149 million in early April 2020.

There is no sign that Russia’s war on Ukraine, which has pushed US gasoline prices to record highs and is expected to worsen the strain on global supply chains, has impacted the labor market.

But supply bottlenecks are holding back companies’ spending on equipment. A separate Commerce Department report on Thursday showed that orders for non-defense capital goods excluding aircraft, a closely watched indicator of business spending plans, fell 0.3% last month after rising 1.3% in January.

Economists had forecast that these so-called core orders for capital goods would rise by 0.5%.

Shipments of core capital goods gained 0.5% last month after rising 2.1% in January. Core capital goods supplies are used to calculate equipment expenditure in the gross domestic product measurement. Economists expect continued strong corporate investment in equipment this quarter.

“It’s possible that the February declines represent a shift in corporate investment intentions, but the February numbers could just reflect noise in the monthly data,” said Daniel Silver, an economist at JPMorgan in New York. “We believe real equipment spending is on track for strong growth in the first quarter, even as associated price increases offset some of nominal gains.”

US stocks rebounded from a sharp decline on Wednesday. The dollar rose against a basket of currencies. US Treasury prices fell.


Companies are desperately looking for workers. At the end of January there were 11.3 million vacancies, with a record 1.8 vacancies per unemployed person.

This mismatch between labor demand and supply fuels wage growth, giving households some protection against rising gasoline prices and leading to high inflation.

The claims report also showed that the number of people receiving benefits after an initial week of assistance fell by 67,000 to 1.350 million in the week ended March 12, the lowest since January 1970. So-called rolling claims data covered the period From where the government surveyed households for the unemployment rate in March.

Between the February and March survey periods, continued applications fell sharply. The unemployment rate fell to a two-year low of 3.8% in February.

“These data suggest that the March jobs report is likely to be similar to recent reports, which have shown strong job growth and a continued decline in the unemployment rate,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.

(Reporting by Lucia Mutikani, editing by Chizu Nomiyama and Paul Simao) US weekly jobless claims fall to lowest level since 1969


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