Initial claims for unemployment benefits inched down further last week, remaining near a multi-decade low amid a persistently tight job market.
New claims dropped by 2,000 to 190,000 for the week ending Feb. 24, lower than the pre-pandemic average of 218,000, according to Labor Department data released on Thursday.
The jobless claims data continued to point to the significant imbalance between labor demand and supply as the number of job vacancies was almost double the number of unemployed workers in recent months.
Despite a substantial number of announced layoffs from major firms, especially in the technology and housing sectors, the data did not suggest that those layoffs had started to appear in the claims number, at least not yet.
We should expect that, with the recent declines in jobless claims, February’s jobs report might again be strong next week.
We should expect that, with the recent declines in jobless claims, February’s jobs report might again be strong when it comes out next week.
The data reaffirms our forecast that the economy will remain on solid ground in the first half of the year before dipping into a recession in the second half.
Based on the strong spending and investment numbers coming out last week, our gross domestic product nowcast for the first quarter of the year has improved to 1.9% from 1.6% previously.
The claims data will be one of the most important leading indicators that will most likely confirm whether a recession is taking place or not.
The impact of the steep rise in interest rates has not gone through the entire market yet. Many companies that announce hiring freezes and layoffs are in sectors that are most sensitive to higher borrowing costs or have become bloated during the pandemic because of a rapid growth in headcounts.
For the rest of the economy, labor shortages still exist as an issue for many companies. As demand for labor remains historically high, laid-off workers seem to be able to find new jobs relatively quickly.
Underneath the top-line number, continuing claims for the week ending Feb. 18 also inched down, to 1.655 million from 1.660 million, remaining below the pre-pandemic level in 2019.
