Applications for US unemployment benefits last week rose to the highest since December, driven by spikes in California and New York and suggesting some softening in what’s still a tight labor market.
(Bloomberg) — Applications for US unemployment benefits last week rose to the highest since December, driven by spikes in California and New York and suggesting some softening in what’s still a tight labor market.
Initial unemployment claims increased by 21,000 to 211,000 in the week ended March 4, Labor Department data showed Thursday. Continuing claims, which include people who have received unemployment benefits for a week or more, rose by the most since November 2021.
Stocks advanced and Treasury yields declined as traders slightly pared back bets on a half-point interest-rate increase at the Federal Reserve’s next meeting. The central bank raised rates by a quarter point at its last meeting.
Chair Jerome Powell testified before Congress this week that the Fed could reaccelerate the pace of hikes should economic data continue to come in strong, but officials haven’t determined yet what they’ll do for the March gathering. Friday’s employment report, as well as inflation data next week, will help inform the decision.
Read more: Fed Needs Only a Solid Jobs Report to Push Ahead on Bigger Hike
The level of initial claims surpassed all estimates in a Bloomberg survey of economists, in which the median called for 195,000 applications. Recurring applications, which are a good indicator of how hard it is for people to find work after losing their job, rose to 1.72 million in the week ended Feb. 25.
On an unadjusted basis, claims jumped by more than 35,000 to 237,513. California and New York accounted for three quarters of the increase. Severe weather across the Midwest and California may have been a factor.
The figures may also have been boosted by New York City school workers like bus drivers and cleaning staff who have negotiated into their contracts the ability to file for unemployment benefits when there’s a school break, according to Stephen Stanley, chief US economist at Santander US Capital Markets LLC.
“This week’s tally was inflated by the New York City school holiday,” Stanley said in a note.
Additionally, technology, media and financial companies have announced tens of thousands of job cuts in recent months. Layoffs that were announced in January may not materialize until now, when the worker is actually coming off the payroll, according to Bloomberg Economics.
Separate data Thursday from Challenger, Gray & Christmas Inc. showed 77,770 job-cut announcements in February, more than five times the number in the same month last year. It also marked the highest level for any February since 2009, according to the group.
What Bloomberg Economics Says…
“The rise in jobless claims is just a taste of what we expect over the next two months, when claims should rise sharply following a spike in layoff announcements. More companies are clearly preparing for an economic slowdown, cutting workers and slowing hiring.”
—Eliza Winger, economist
To read the full note, click here
Despite the jump in claims, the labor market remains robust. Reports on private payrolls and jobs openings released this week showed solid hiring and demand for workers.
The claims data can be choppy from week-to-week and especially around holidays, and the figures came near Presidents’ Day. The four-week moving average in initial claims, which smooths out some of the volatility, edged up to 197,000, the highest since January.
–With assistance from Jordan Yadoo, Vince Golle and Alex Tanzi.
(Adds details on NYC school workers)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.