The number of Americans filing new claims for unemployment benefits rose more than anticipated last week, signaling a gradual easing of labor market conditions.
According to the Labor Department’s report on Thursday, initial claims for state unemployment benefits increased by 9,000 to a seasonally adjusted 221,000 for the week ending March 30. Economists surveyed by Reuters had projected 214,000 claims for the latest week.
Throughout March, claims fluctuated between 212,000 and 210,000. Government data revealed that in February, there were 1.36 job openings for every unemployed person, compared to 1.43 in January.
Worker shortages persist in sectors such as construction. Despite layoffs reaching a 14-month high in March, job cuts remained relatively stable compared to the same period last year.
The resilience of the labor market continues to support the economy, with gross domestic product (GDP) expanding at a robust 3.4% annualized rate in the fourth quarter. Growth estimates for the first quarter are projected to reach as high as a 2.8% pace. This strength, coupled with ongoing high inflation, could prompt the Federal Reserve to postpone an anticipated interest rate cut this year.
Federal Reserve Chair Jerome Powell reiterated on Wednesday that the central bank has the luxury of time to deliberate over its first rate cut, acknowledging the economy’s resilience and persistent inflation.
Since March 2022, the Fed has increased its policy rate by 525 basis points to the current 5.25%-5.50% range.
The number of individuals receiving benefits after an initial week of aid, which serves as a proxy for hiring, decreased by 19,000 to 1.791 million during the week ending March 23, as indicated by the claims report.
It’s important to note that the claims data do not impact March’s employment report, scheduled for release on Friday, as they fall outside the survey period. According to a Reuters survey, nonfarm payrolls are expected to have increased by 200,000 jobs last month, following a rise of 275,000 in February, with the unemployment rate forecasted to remain unchanged at 3.9%.
