The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth remained strong in March.
The Federal Reserve on Wednesday left interest rates unchanged. Fed Chair Jerome Powell told reporters he did not see "cracks" in the labor market, which he described as "in good shape," noting that "the extreme imbalances that we saw in the early parts of the pandemic recovery have mostly been resolved."
"Fed officials are waiting on confirmation that inflation is in check before cutting interest rates, but one thing they can be confident of is that companies are not laying off workers and the labor market remains relatively strong," said Christopher Rupkey, chief economist at FWDBONDS.
Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 210,000 for the week ended March 16, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims in the latest week.
Unadjusted claims decreased 12,730 to 189,992 last week. Applications in California plunged by 5,369, while filings in Oregon fell 2,580. They more than offset notable increases in Michigan and Missouri.
Fed officials indicated on Wednesday that they still expected to trim the U.S. central bank's policy rate by three-quarters of a percentage point by the end of the year. The U.S. central bank has raised its benchmark interest rate by 525 basis points to the current 5.25%-5.50% range since March 2022.
Labor market resilience is helping to underpin the economy, which continues to outshine its global peers. Despite a flurry of high-profile layoffs at the start of the year, employers have largely been hoarding labor after struggling to find workers during and after the COVID-19 pandemic.
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of March's employment report. Claims rose marginally between the February and March survey weeks. The economy added 275,000 jobs in February.
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the health of the labor market in March. The so-called continuing claims increased 4,000 to 1.807 million during the week ending March 9, the claims report on Thursday showed.
"The labor market is gradually rebalancing, but the adjustment appears to be coming from less hiring rather than a surge in firings," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "We expect job growth to slow somewhat but the unemployment rate to remain low this year."
