Fewer Americans filed for jobless claims last week as the labor market continued to grow despite the Federal Reserve’s efforts to cool the economy and reduce inflation.
US jobless claims applications for the week ending March 11 fell 20,000 to 192,000 from the previous week’s 212,000, the Labor Department said on Thursday.
The four-week moving average of claims, which flattens out some week-to-week volatility, fell 750 to 196,500, remaining below the 200,000 mark for an eighth straight week.
Unemployment benefit applications are seen as a barometer for layoffs in the US
At its February meeting, the Fed raised its key lending rate by 25 basis points, its eighth straight rate hike in its year-long fight against stubborn inflation. Recent data shows those rate hikes have done little to tame inflation and do little to cool the economy and labor market, a move many analysts had expected when the Fed meets next week. Will increase rates by half a point.
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However, after last week’s second and third biggest bank failures in US history – which have been blamed in large part on rising interest rates – some economists are thinking Fed officials will tread more lightly next week and either Will increase by 25 basis points or maybe not at all.
The central bank’s benchmark rate is now in the range of 4.5% to 4.75%, its highest level in 15 years. Before the banking sector turmoil that began last week, the Fed indicated that two more rate hikes were likely this year. Some analysts also forecast three hikes that could push the low end of that rate up to 5.5%.
The Fed’s rate hikes tend to cool the economy, the labor market and wages, causing prices to decrease. But so far, none of that has happened, at least not to the extent that the central bank had hoped.
Inflation remains more than double the Fed’s 2% target, and the economy is growing and adding jobs at a healthy clip.
Last month, the government reported that employers added a substantial 311,000 jobs in February, less than January’s huge gains but enough to keep pressure on the Federal Reserve to raise interest rates aggressively to fight inflation. The unemployment rate rose from a 53-year low of 3.4% to 3.6%.
Fed policymakers have projected that the unemployment rate will rise to 4.6% by the end of this year, a large increase historically associated with recessions.
Although the US labor market remains strong, layoffs are rising in the technology sector, where many companies overheard after the pandemic boom. IBM, Microsoft, Amazon, Salesforce, Twitter and DoorDash have all announced layoffs in recent months.
Earlier this week, Facebook parent Meta said it was cutting another 10,000 jobs in addition to the 11,000 it planned for in November. The social media giant also said that it will not fill the 5,000 vacant positions.
The real estate sector has been hit the most by the Fed’s interest rate hike. High mortgage rates — which have risen again in recent weeks to near 7% — have slowed home sales for 12 straight months. That’s almost in lockstep with the Fed’s rate hikes that began last March.
About 1.68 million people were receiving jobless aid in the week ending March 4, a decrease of 29,000 from the week before.
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