US Unemployment Claims Drop, Labor Market Remains Strong
- Labor Department reports a slight decrease in initial unemployment claims.
- Continuing unemployment claims increased slightly, indicating that some laid-off workers could be finding new work.
- Despite recent bank failures causing market turbulence, the economy shows no signs of impact.
- Layoffs by major technology companies have increased this year, but claims remain low by historical standards.
According to the Labor Department, the number of Americans who applied for unemployment benefits dropped slightly last week.
Despite recent financial market turbulence after two regional banks failed, the economy showed no signs of impact.
Initial claims for state unemployment benefits decreased by 1,000 to a seasonally adjusted 192,000 for the week ending on March 18, which is lower than the 197,000 claims forecasted by economists polled by Reuters.
Continuing claims increased slightly to 1.694 million during the week ending March 11, indicating that some laid off workers could be readily finding new work.
The number of layoffs by major technology companies has increased this year, but claims have remained low by historical standards.
Economists Predicts Loosening Amid Bank Collapses
Employers are also reluctant to let go of workers as there are 1.9 job openings for every unemployed person. However, economists expect the labor market to loosen in the aftermath of the collapse of Silicon Valley Bank and Signature Bank, which could cause banks to be more strict in extending credit and impact households and small businesses that drive job growth.
Federal Reserve Raises Interest Rates, Signals Pause in Future Increases
On Wednesday, the Federal Reserve raised its benchmark overnight interest rate by a quarter of a percentage point but indicated it would pause further increases in borrowing costs.
Fed Chair Jerome Powell acknowledged the recent events may result in some tightening of credit conditions for households and businesses, leading to lower demand in the labor market and inflation.
Next week’s data on the number of people receiving benefits after an initial week of aid will provide more insight into the labor market’s health in March.