WASHINGTON – The number of Americans filing new claims for unemployment benefits fell last week, signaling a tightening of labor market conditions ahead of the second quarter, which could contribute to improving inflation.
The part of the demand decline in the 53-year period in mid-March reflects a correction of seasonal factors, a model that the government uses to exclude seasonal fluctuations from data.
During the Coronavirus Disease 2019 (COVID-19) epidemic, the Department of Labor switched to add-on factors to adjust from early and ongoing demand data multiplier factors according to the season, which economists complained was less reliable due to the economic shock caused by the coronavirus crisis.
“Now that most of the major impacts of the epidemic in the unemployment insurance series have diminished, seasonal adjustment models have again been specified as qualitative models,” the Department of Labor said in a statement Thursday. “Statistical tests show that the unemployment insurance series, at normal times, should be estimated qualitatively.”
Preliminary claims for state unemployment benefits fell to 5,000 seasonally adjusted 166,000 for the week ended April 2. Claims for the week ending March 19 were at this level, the lowest since November 1968.
The seasonal factors of that time were very different from now, which made it difficult to compare. Economists surveyed by Reuters forecast 200,000 applications last week.
The government also revised claims data from 2017 to 2021, which showed much lower filing levels last year. Going back to quality reasons, applications have dropped by about 20,000-40,000 in recent weeks. At the beginning of April 2020, claims reached a record high of 6.137 million.
The government has said it will use a hybrid of qualitative and additive seasonal factors while the epidemic is within five years of the correction period. Qualitative seasonal factors are assumed to be proportional to the level of filing while addition factors are not affected.
Conrad Dicudros, a senior economic adviser at Brain Capital in New York, said: “The message continues from this volatile and revisionist data that the labor market is very tight by most historical standards.
A severe shortage of workers is keeping layoffs low and increasing recruitment. Demand for this specialty has grown significantly as a result of recent corporate scandals.
Demand in Michigan and Texas has fallen sharply, offsetting growth in California, Ohio and Pennsylvania.
Stocks were low on Wall Street. The dollar was stable against the basket of currencies. Long-dated U.S. Treasury prices have fallen.
Nearby record job opening
The Russia-Ukraine war, which pushed gasoline prices above 4 4 per gallon, has so far shown no signs of affecting the labor market. Non-farm pay increased 431,000 jobs in March, the government reported last Friday.
March marked the 11th month of more than 400,000 job gains, pushing the unemployment rate to a new two-year low of 3.6%. The unemployment rate is only one tenth of a percentage point above its pre-epidemic level.
With nearly 11.3 million jobs created in the last days of February, labor shortages are forcing companies to raise wages, contributing to higher inflation.
Although the number of beneficiaries increased by 17,000 to 1.523 million after the initial week of assistance in the week ending March 26, according to the claims report, the tendency for so-called continued claims was low.
Daniel Silver, an economist at JPMorgan in New York, said: “This is a small step from the revised text for the week ending March 19, which is currently the lowest since the onset of the epidemic.”
The minutes of the Federal Reserve’s March 15-16 meeting, released on Wednesday, show policymakers that “labor demand in many parts of the economy has surpassed sufficient supply,” and “various indicators point to a very strong labor market.”
The US Federal Reserve raised its policy interest rate by 25 basis points last month, the first increase in more than three years. Wednesday evening was seen setting the stage for a thick rate hike down the street.
Job startups have surpassed the number of unemployed, illustrating the recruitment challenges that companies are facing. 6.0 million people were officially unemployed in March.
As a result of strong wage growth providing some cushions for consumers affected by rising prices, annual inflation is rising at the fastest pace in 40 years.
“The job market is strong, relieving consumer inflation and geopolitical concerns,” said Scott Murray, an economist at Nationwide in Columbus, Ohio. “Open positions and fewer cuts point to stronger economic growth.” – Lucia Mutikani / Reuters