New claims for jobless benefits increased by 14,000 last week to 202,000, continuing to stay below the pre-pandemic level in 2019. The increase was likely temporary as the labor market remained tight.
Looking at the 13-week moving average—our preferred measure—new claims have stayed mostly flat in the past three months.
We should expect new filings for jobless claims to hover around the 2019 average because of labor headwinds coming this year.
The most notable challenge will be multiple interest rate hikes, which will effectively slow the economy down by tempering aggregate demand. Waning fiscal support will also help to ease some of the labor demand pressures.
The total number of continuing claims was down for the week ending March 19 to 1.31 million from 1.34 million in the prior week.
Labor shortages are forcing employers to hold on to their workers, but as some workers return to the labor force, that will help with the current imbalance.
But many are skeptical because a large portion of the labor shortage also comes from a skills mismatch, which won’t likely be solved by simply adding more labor supply. We also note that workers who return to the labor force won’t be eligible for jobless benefits.
On a non-seasonally adjusted basis, the largest increases in new claims were from Michigan, Ohio and California.
