Applications for unemployment insurance inched up higher than expected in the latest weekly data but extended a broader trend downward after surging COVID-19 infections earlier this winter briefly disrupted the labor market’s recovery to start the year.
The Labor Department released its latest weekly jobless claims report Thursday at 8:30 a.m. ET. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended March 5: 227,000 vs. 217,000 expected and an upwardly revised 216,000 during prior week
Continuing claims, week ended Feb. 26: 1.494 million vs. 1.450 million expected and an downwardly revised 1.469 during prior week
The previous report reflected initial jobless claims of 215,000 filed in the final full week of February, marking a two-month low and a read better than economists had anticipated. The figure also reached the lowest level since the week ended Dec. 31, when new weekly claims totaled 207,000.
Economists surveyed by Bloomberg expect the latest reading to be at 217,000. Meanwhile, Bank of America forecasted initial jobless claims are likely to fall to 210,000 in the week ending March 5, continuing to signal labor market tightness as companies continue to hold onto workers, the financial institution said in a recent note.
“With seemingly no shortage of sources of turmoil in our world, the U.S. job market has, at least so far, remained a source of relative strength and stability,” Bankrate senior economic analyst Mark Hamrick said in a note. He signaled, however, that although “COVID has relaxed its grip,” inflationary pressures and continuing, and potentially growing supply shocks, will have an “inescapable negative impact on the economy.”
Filings for unemployment insurance have mostly fallen lower after a temporary surge mid-January to a print of nearly 300,000, following a rush of U.S. workers applying for benefits amid disruptions from the Omicron coronavirus variant and workforce after the seasonal hiring increase at the end of 2021. Although COVID’s impact on the labor market have appeared to ease, the economic toll the war in Eastern Europe may have remains unclear.
“The recent shocking surge in gasoline prices, if sustained, will serve as a costly tax on consumers,” Hamrick added. “How much that slows economic momentum in the coming days, weeks and beyond, is difficult to precisely gauge and predict at this point.”
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, predicted in a note that rapidly improving labor market conditions should continue “for now.”
The Labor Department’s broader gauge of the U.S. workforce, the February jobs report out last week, again surprised to the upside. The U.S. economy added back 678,000 jobs last month, the most since July 2021 as employment accelerated, even in the already-tight labor market.
“At the moment, the financial market turbulence and coming slowdown in Europe’s economy after Russia invaded Ukraine is having no spillover effect in the U.S.,” FWDBONDS chief economist Christopher S. Rupkey said in a note.
While an improving labor market is good for U.S. households, the trend again reverts attention back to the Federal Reserve. Widespread job openings have made room for significant leverage for workers, driving wage gains higher and further elevating inflationary pressures. Average hourly earnings decelerated in February but rose 5.1% on a year-over-year basis.
“Labor demand is very strong, and while labor force participation has ticked up, labor supply remains subdued,” Federal Reserve Chair Jerome Powell said in congressional testimony last week. “As a result, employers are having difficulties filling job openings, an unprecedented number of workers are quitting to take new jobs, and wages are rising at their fastest pace in many years.”
Powell added that fellow central bank policymakers would agree the current labor situation is consistent with maximum employment, and as a result, he would support a 25-basis point interest-rate hike after the Fed’s next meeting concludes on March 16.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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