The number of Americans applying for unemployment benefits last week fell to its lowest level in 52 years as the U.S. job market continues to show strength in the midst of rising costs and an ongoing virus pandemic.
Jobless claims fell by 28,000 to 187,000 for the week ending March 19, the lowest since September of 1969, according to the Labor Department's latest weekly jobless claims report on Thursday.
The shrinking unemployment rolls as companies starved for workers seek to fill vacant positions will keep wage inflation rising, experts predict.
First-time applications for jobless aid generally track the pace of layoffs, and economists polled by Reuters had initially forecasted 212,000 applications for the latest week.
The four-week average for claims, which compensates for weekly volatility, also fell to levels not seen in five decades. The Labor Department reported that the four-week moving average tumbled to 211,750 from the previous week's 223,250.
In total, 1,350,000 Americans were collecting jobless aid the week that ended March 12 - the lowest since January 1970.
Jobless claims rose by 28,000 to 187,000 last week, the Labor Department said, an unexpected rise as economist predicted claims to fall to 212,000
The number of jobless claims has been declining in month since an uptick in January. The claims were expected to keep falling throughout February and March
Altogether, nearly 1.35 million people were collecting jobless aid the week that ended March 12, the lowest in 52 years
Earlier this month, the government reported that employers added a robust 678,000 jobs in February, the largest monthly total since July. The unemployment rate went down to 3.8 percent, from 4 percent in January, extending a decline in joblessness to its lowest level since before the pandemic erupted two years ago.
Last week's drop in claims was widespread, with large decreases in California, Michigan, Kentucky and Illinois.
Claims have been declining in part as COVID-19 restrictions across the country have been lifted amid a massive drop in coronavirus cases. They have declined from a record high of 6.149 million in early April 2020.
Russia's war against Ukraine, which has sent U.S. gasoline prices to record highs and is expected to worsen the strain on global supply chains, has not shown any signs of impact on the national labor market.
U.S. businesses posted a near-record level of open jobs in January — 11.3 million — a trend has helped pad workers' pay and added to inflationary pressures.
The asymmetry between demand for labor and supply is encouraging salary increase for employed families and individuals, providing buying power to households against the recent all-time hike in gasoline prices and inflation.
The new jobless claims from the Labor Department come as the average price of self-serve regular gasoline has continuously climbed. Pictured: Gas prices in Los Angeles County, the most populous county in the United States, rose 1.6 cents last Sunday to a record high of 5.982 U.S. dollars, its 26th consecutive increase
Claims have been decreasing in part as COVID-19 restrictions across the country have been lifted despite a recent surge earlier this month
The war in Ukraine was also supposed to have an impact on the U.S. economy but has show no signs of slowing down the national labor market
The Federal Reserve launched a high-risk effort last week to tame the worst inflation since the early 1980s, as Fed Chair Jerome Powell on Monday said the U.S. central bank must move 'expeditiously' to raise rates and possibly 'more aggressively.'
The Fed’s quarter-point hike in its key rate, which it had pinned near zero since the pandemic recession struck two years ago, marks the start of its effort to curb the high inflation that followed the recovery from the recession. The rate hikes will eventually mean higher loan rates for many consumers and businesses.
'U.S. businesses are not laying off workers because they know the enormous challenges they're facing in filling open positions,' said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
'If initial claims remain below 200,000 for a period of time, it will raise a red flag with the Fed.'
The central bank's policymakers have projected that inflation will remain elevated, ending 2022 at 4.3 percent
Earlier this month, the government reported that consumer inflation jumped 7.9 percent over the past year, the sharpest spike since 1982.
Jerome Powell, Chairman of the U.S. Federal Reserve, increased the central bank's policy interest rate by 25 basis points, the first hike in more than three years in order to tame inflation from being at its worst since the 1980s