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The latest jobless claims indicate that the US labor market is tight amid rising interest rates as applications rose by 7,000.
According to the Labor Department, US weekly jobless claims have climbed to 198,000, representing an increase of 7,000. Although the new figure is slightly higher than the 195,000 expected, it is still generally low in a tight labor market.
The Department of Labor also reported a four-week moving average of weekly claims amounting to 198,250. This figure revealed an increase of 2,000 from the previous week’s unrevised average of 196,250.
Still reporting seasonally adjusted data, the US Labor Department added:
“The advance seasonally adjusted insured unemployment rate was 1.2% for the week ending March 18th, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 18th was 1,689,000, an increase of 4,000 from the previous week’s revised level. The previous week’s level was revised down by 9,000 from 1,694,000 to 1,685,000.”
Under Unadjusted Data, the Federal Reserve said:
“The advance number of actual initial claims under state programs, unadjusted, totaled 223,913 in the week ending March 25th, an increase of 10,906 (or 5.1%) from the previous week. The seasonal factors had expected an increase of 3,051 (or 1.4%) from the previous week. There were 196,811 initial claims in the comparable week in 2022.”
Jobless Claims to Be Below 200,000 Since Mid-January
The country’s jobless claims have been below 200,000 since mid-January. In addition, the data for the week-ended March 25th reflected a hesitancy among companies to lay off employees. This downsizing hesitancy seems peculiar because the unemployment rate could rise throughout the year.
Jobless claims also came in relatively mild despite the Federal Reserve’s ongoing aggressive efforts to tame inflation by hiking interest rates. Furthermore, the US apex bank seeks a labor market characterized by a sharp supply-demand imbalance. Ideally, the Fed envisions his acute imbalance as introducing roughly two jobs for every available worker.
Amid jobless claims development, continuing claims increased 4,000 to 1.689 million. This figure was lower than the consensus estimates of 1.6935 million for the same period.
Gross domestic product (GDP) reportedly grew at a 2.6% annualized rate in Q4 2022. However, this increment was slightly lower than the previous estimate of 2.7% due to consumer spending and exports’ downward revisions.
The first quarter of 2023 has proven different, with Atlanta Fed’s GDPNow tracker estimating that GDP climbed at a 3.2% pace.
Last week, Bloomberg reported an unexpected decline in jobless claims for a second week, underscoring employer reluctance to reduce headcount. The report stated that initial filings for jobless benefits declined by 1,000 to 191,000 in the week-ended March 18th.
The full extent of the impact of recent bank failures on the US job market remains unclear. However, stiffer lending standards and increased borrowing costs could restrain the economy.
Three US banks, including Silicon Valley Bank (SVB), collapsed earlier in the month after sustaining a bank run. This development threw the banking sector into a tailspin and threatened to impact other at-risk financial institutions.
On March 27th, First Citizens Bank acquired all SVB loans and customer deposits from the Federal Deposit Insurance Corporation (FDIC). First Citizens also reopened all SVB branches as First Citizens Bank and Trust Company.