US claims for unemployment benefits unexpectedly fell to the lowest in three weeks, signaling unrelenting tightness in the labor market.
(Bloomberg) — US claims for unemployment benefits unexpectedly fell to the lowest in three weeks, signaling unrelenting tightness in the labor market.
Initial unemployment claims decreased by 3,000 to 192,000 in the week ended Feb. 18, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for 200,000 applications.
Continuing claims, which include people who have already received unemployment benefits for a week or more, decreased by 37,000 — the biggest drop since December — to 1.65 million in the week ended Feb. 11.
The labor market is tight by many measures, including robust job creation, low unemployment and millions of open positions. That’s been a key concern for the Federal Reserve as policymakers see the strength as a factor that’s keeping inflation elevated.
At the central bank’s gathering earlier this month, a few officials noted that businesses are holding onto workers given recent hiring challenges, according to minutes of the meeting released Wednesday. Many economists point to that practice, known as “labor hoarding,” as a reason why claims remain historically low despite mounting economic uncertainty.
One ominous sign is layoffs on the rise. Meta Platforms Inc. is preparing for another round of job cuts that could affect thousands of workers, according to the Washington Post. The cuts are spreading to some other sectors, with advisory firm McKinsey & Co. planning to eliminate about 2,000 jobs.
What Bloomberg Economics Says…
“Fed officials may see the labor data as supporting the need for continued rate hikes beyond the March FOMC meeting.”
— Eliza Winger, economist
To read the full note, click here
The four-week moving average in initial claims, which smooths out week-to-week volatility, ticked up for a second week to 191,250.
On an unadjusted basis, initial claims dropped to 210,867, led by California and Michigan. Claims were estimated in the latest week for four states.
Separate data Thursday showed US economic growth in the fourth quarter was weaker than previously estimated, reflecting a downward revision to consumer spending as the Fed’s preferred inflation figures were revised higher.
–With assistance from Jordan Yadoo.
(Adds revised data on fourth-quarter GDP in final paragraph. An earlier version corrected the scope of the level of initial claims to the lowest in three weeks, not four.)
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