Jobless claims rise 7,000 to 198,000

The number of Americans filing new jobless claims rose slightly last week and has yet to show any signs that tightening credit conditions are having a significant impact on the still-strained job market.

Initial jobless claims rose by 7,000 to a seasonally adjusted 198,000 for the week ended March 25, the Labor Department said on Thursday.

Economists polled by Reuters had forecast 196,000 applications last week.

Claims have remained very low and in narrow range despite high-profile layoffs in the tech industry.

Economists attributed some of the low claims to seasonal adjustment factors, the model the government is using to remove seasonal variations from the data that they think may have been affected by the COVID-19 pandemic.

However, they acknowledged that even using alternative methods, the claims were still slim.

“While alternative seasonal adjustment approaches of late may suggest less optimistic numbers, they don’t suggest particularly weak outcomes, although momentum could be fading,” said Daniel Silver, economist at JPMorgan.

The Labor Department said updated seasonal adjustment factors would be available next month.

credit crunch

With 1.9 vacancies for every unemployed person in January, employers were generally reluctant to lay off workers, and laid-off workers could easily find new employment.

But tightening lending standards following the recent collapse of two regional banks could make it harder for households and small businesses to access credit and potentially dampen demand for labour.

According to an analysis by Goldman Sachs, the leisure, hospitality and other service industries have been heavily dependent on bank lending. A lack of access to credit could also worsen the current difficult environment for the information sector.

“Over the past six months, these two industries accounted for half of the plus 150,000 average excess in nonfarm payrolls growth compared to the average pre-pandemic pace,” Goldman Sachs economist Spencer Hill said in a note. “We expect job growth in this sector to slow as reduced availability of credit discourages restaurateurs and other smaller businesses from hiring and opening new facilities.”

The number of people receiving benefits after an initial week of aid, a stand-in for recruitment, rose 4,000 to 1.689 million in the week ended March 18.

The so-called rolling applications covered the period when the government was polling households for the unemployment rate for March.

Between the survey weeks of February and March, standing applications increased slightly. The unemployment rate was 3.6% in February.

Labor market resilience is helping to keep a recession at bay.

In a second report on Thursday, the Commerce Department confirmed that the economy grew solidly in the fourth quarter, although much of the increase in output was due to inventory build-ups, most of which were unplanned.

Gross domestic product rose at a revised annual rate of 2.6% last quarter, the government said in its third estimate of GDP for the fourth quarter.

That has been revised down from the 2.7% pace reported last month. Economists had expected GDP growth to be flat. Growth estimates for the first quarter are currently up to 3.2%.