WASHINGTON: The number of Americans filing new claims for unemployment benefits edged down last week, showing no signs yet that the recent financial market turbulence following the failure of two regional banks was having an impact on the economy.
The unexpected dip in claims reported by the Labor Department on Thursday suggested March could be another month of solid job growth. The weekly unemployment claims report is the most timely data on the economy’s health.
“A week after the banking panic began, the labor market is steady as a rock with no new layoffs nationwide,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Credit conditions may tighten as banks grow more cautious, but it could be weeks or months before that translates into a material slowdown in real economic activity.” Initial claims for state unemployment benefits fell 1,000 to a seasonally adjusted 191,000 for the week ended March 18.
Economists polled by Reuters had forecast 197,000 claims for the latest week. Claims have bounced around in a tight range this year, remaining very low by historical standards, despite a rush of layoffs by major technology companies.
Unadjusted claims dropped 4,659 to 213,425 last week. A jump in filings in Indiana and an increase in Massachusetts were offset by decreases in California, Illinois and New York.
With 1.9 job openings for every unemployed person in January, employers are generally reluctant to let go of workers.
US stocks opened higher. The dollar was steady against a basket of currencies. US Treasury prices fell.
Economists expect labor market conditions to loosen, especially in the wake of the collapse of Silicon Valley Bank in California and Signature Bank in New York. Financial conditions have tightened, which could cause banks to become more strict in extending credit, potentially impacting households and small businesses, who have been the main drivers of job growth.
That was acknowledged by the Federal Reserve, which on Wednesday raised its benchmark overnight interest rate by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs.
The US central bank has raised its policy rate by 475 basis points since last March from near-zero to the current 4.75%-5.00% range.
Fed Chair Jerome Powell told reporters that “the events of the last two weeks are likely to result in some tightening of credit conditions for households and businesses, and thereby weigh on demand on the labor market and inflation.”
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of March’s employment report.
Claims were little changed between the February and March survey weeks. The economy created 311,000 jobs in February after adding 504,000 in January.
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will shed more light on the health of the labor market in March.
The so-called continuing claims increased 14,000 to 1.694 million during the week ending March 11, the claims report showed. Continuing claims remain very low, indicating some laid off workers could be readily finding new work.