Americans filing for jobless benefits rise as labour market stays strong
The number of Americans filing for unemployment benefits last week rebounded from a near 44-year low, but the labour market continues to tighten amid a sharp drop in job cuts in February.
Initial claims for state unemployment benefits rose 20,000 to a seasonally adjusted 243,000 for the week ended March 4, the Labour Department said on Thursday. Claims for the prior week were unrevised at 223,000, the lowest level since March 1973.
It was the 105th straight week that claims remained below 300,000, a threshold associated with a healthy labour market. That is the longest stretch since 1970, when the labour market was much smaller.
Economists had forecast new claims for unemployment benefits rising to 235,000 in the latest week. The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, rose 2,250 to 236,500 last week.
In a separate report, global outplacement firm Challenger, Gray & Christmas said US-based employers announced 36,957 job cuts in February, down 19 per cent from January. The retail sector continued to dominate layoffs last month as it shifts toward online and scales back on brick-and-mortar operations.
JC Penney topped the list, announcing 5,500 job cuts as a result of 140 store closures.
US Treasuries were little changed on the data. The dollar fell to a session low against a basket of currencies as the European Central Bank pledged to keep its aggressive stimulus policy at least until the end of the year.
The labour market is at or close to full employment, with employers increasingly reporting difficulties finding qualified workers for open job positions. Labour market tightness together with firming inflation could allow the Federal Reserve to raise interest rates as early as next week.
Fed Chair Janet Yellen signalled last week that the US central bank would likely raise rates at its March 14-15 policy meeting. The Fed raised its benchmark overnight rate in December and has forecast three rate increases for 2017.
The labour market strength comes despite the economy showing signs of fatigue early in the first quarter. Data on trade, consumer, business and construction spending were soft in January, leaving the Atlanta Fed forecasting GDP increasing at a 1.2 per cent rate in the first quarter.
The economy grew at a 1.9 per cent annualised rate in the fourth quarter, slowing from the third quarter’s brisk 3.5 per cent pace.
The claims report has no bearing on February’s employment report, which is scheduled for release on Friday, as it falls outside the survey period. First-time applications for jobless benefits declined in February, suggesting another month of strong employment growth.
According to a survey of economists, non-farm payrolls probably increased by 190,000 jobs last month after surging 227,000 in January. The unemployment rate is forecast falling one-tenth of a percentage point to 4.7 per cent.
But payrolls could surprise on the upside after a report on Wednesday showed private sector employers hired 298,000 workers in February, the largest amount in a year.
In another report on Thursday, the Labour Department said import prices rose 0.2 per cent last month after advancing 0.6 per cent in January. It was the third straight monthly increase.
In the 12 months through February, import prices accelerated 4.6 per cent, the largest gain since February 2012, after rising 3.8 per cent in January.
Import prices excluding fuels rose 0.3 per cent, the first increase since July, after slipping 0.1 per cent in January.