US labor market tightens as weekly jobless claims hit lowest level since 1969

A restaurant advertising jobs seeks to attract workers in Oceanside, California, U.S., May 10, 2021. REUTERS/Mike Blake/

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  • Weekly jobless claims fall 28,000 to 187,000
  • Continued claims fall 67,000 to 1,350 million
  • Core capital goods orders fall 0.3% in February

WASHINGTON, March 24 (Reuters) – The number of Americans filing new claims for jobless benefits fell last week to a 52-1/2-year low as jobless rolls continued to shrink, pointing to a rapid decline in the slack in the labor market that will continue to increase. wage inflation.

The strength in the labor market reported by the Labor Department on Thursday may push the Federal Reserve to raise interest rates by half a percentage point at its next policy meeting in May. Fed Chairman Jerome Powell said on Monday that the US central bank must move “quickly” to raise rates and possibly “more aggressively” to prevent high inflation from taking hold. Read more

The Fed last week raised its policy rate by 25 basis points, the first hike in more than three years.

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“Business America isn’t laying off workers because they know the enormous challenges they face in filling open positions,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

“If initial claims stay below 200,000 for a period of time, the Fed will give you a red flag.”

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

Last week’s drop in claims was across the board, with big declines in California, Michigan, Kentucky and Illinois.

unemployment claims

Claims have dropped in part as COVID-19 restrictions were lifted across the country amid a massive drop in coronavirus cases. They have plummeted from an all-time 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 strain on global supply chains, has impacted the labor market and activity. business.

An S&P Global survey showed on Thursday that its US composite PMI output index, which tracks the manufacturing and services sectors, rose to an eight-month high of 58.5 in March from 55.9 in February, driven by strong demand for goods and services. Businesses were optimistic about this year’s prospects, but service firms were concerned about the fallout from rising costs of living caused by the war between Russia and Ukraine.

Stocks on Wall Street recovered from a sharp drop on Wednesday. The dollar (.DXY) rose in front of a basket of coins. US Treasury bond prices fell.


A third report from the Commerce Department showed non-defense capital goods orders excluding aircraft, a gauge closely watched by business spending plans, fell 0.3% in February, the first drop in a year. anus. But data for January was revised higher to show these so-called core capital goods orders accelerated by 1.3% instead of 1.0% as previously reported.

Last month’s drop reflected declines in orders for machinery, primary metals, fabricated metals, as well as computers and electronics.

Basic capital goods

Shipments of basic capital goods rose 0.5% last month. January data was also revised upwards to show that shipments increased by 2.1% in January instead of the 1.9% previously estimated.

Shipments of basic capital goods are used to calculate equipment spending in the gross domestic product measure. Given the January revision, economists expect strong business investment in equipment this quarter.

“February declines may represent a change in companies’ intentions for capital spending, but the February numbers may also 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 with related price increases offsetting some of the nominal gains.”

Layoffs are likely to remain low for some time amid a severe shortage of workers. There were 11.3 million job vacancies at the end of January, with a record 1.8 job vacancies per unemployed person. This mismatch between labor demand and supply is fueling wage growth, providing some cushion to households from rising gasoline prices, as well as fueling high inflation.

More people could re-enter the workforce this month as COVID-19 infections fall, boosting payroll growth.

The claims report showed that the number of people receiving benefits after an initial week of help fell 67 billion to 1.35 billion during the week ending March 12, the lowest level since January 1970. The so-called continuous claims data covered the period during which the government surveyed households for the March unemployment rate.

Ongoing requests decreased significantly between the February and March survey periods. 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 continued declines in the unemployment rate,” said Conrad DeQuadros, chief economic adviser at Brean Capital. In New York.

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Reporting by Lucia Mutikani Editing by Chizu Nomiyama and Paul Simao

Our standards: The Thomson Reuters Trust Principles.

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