Fewer Americans sought unemployment benefits last week, as layoffs continue to decline despite a healthy labor market recovery.
The Labor Department announced Thursday that jobless claims declined by 15,000 to 214,000 for the week ending March 12, down from 229,000 the prior week. First-time applications for unemployment benefits often reflect the rate of layoffs.
The four-week average of claims, which accounts for weekly volatility, declined to 223,000 from 231,750 the previous week. In all, 1,419,000 Americans – a 50-year low – were receiving unemployment benefits in the week ending March 5, down 71,000 from the previous week.
The government announced earlier this month that companies created a solid 678,000 jobs in February, the highest monthly number since July. The unemployment rate fell to 3.8 percent in February, down from 4 percent in January, extending a significant reduction in joblessness to its lowest level since before the epidemic began two years ago.
In January, U.S. firms advertised a near-record number of available positions – 11.3 million — a pattern that has helped boost employees’ salaries and added to inflationary pressures.
“Demand for workers remains robust, and firms continue to report shortages,” said Rubeela Farooqi, chief U.S. economist at High-Frequency Economics. “That should keep layoffs to a minimum for the time being.”
Economists predict the tight labor market to continue in 2022, with firms hanging on to existing employees “while staying stubbornly in hiring mode,” according to research by Lydia Boussour, senior US economist, and Kathy Bostjancic, chief US financial economist, at Oxford Economics.
“This will continue to put downward pressure on unemployment claims and will most likely drive them considerably lower in the coming months,” they said.
The Federal Reserve began a high-risk campaign to contain the worst inflation since the early 1980s on Wednesday, increasing its benchmark short-term interest rate and suggesting up to six further rate rises this year.
The Fed’s quarter-point increase in its benchmark rate, which it had kept near zero since the global crisis struck two years ago, marks the start of the Fed’s effort to rein in the soaring inflation that accompanied the recession’s recovery. Many consumers and companies may eventually face higher borrowing rates as a result of the rate increases.
According to quarterly predictions provided Wednesday by the central bank, officials anticipate inflation to stay elevated, finishing 2022 at 4.3 percent.
The government stated this week that consumer inflation had risen 7.9 percent in the previous year, the highest rate since 1982.