The number of initial unemployment insurance claims rose slightly last week but generally remained low in a tight labor market. According to the Labor Department, jobless claims for the week ending March 25 totaled 198,000, an increase of 7,000 from the previous week, and slightly higher than the anticipated 195,000. The data suggests that companies are hesitant to lay off workers despite predictions of a rising unemployment rate throughout the year.
Continuing claims experienced a minor increase of 4,000 to 1.689 million, which was below the FactSet estimate of 1.6935 million. The four-week moving average of weekly claims saw a small increase to 198,250 but has stayed under 200,000 since mid-January.
The generally low claims numbers persist despite the Federal Reserve's efforts to curb inflation by targeting the labor market, which is currently experiencing a significant supply-demand imbalance. There are nearly two job openings for every available worker. Central bank estimates last week projected the unemployment rate to rise to 4.5% this year from its current 3.6% level, requiring a loss of over 540,000 jobs, according to an Atlanta Fed calculator.
Stuart Hoffman, senior economic advisor at PNC, said, "Although hiring in the U.S. economy remains strong, there appears to be the potential for more slack in hiring trends set for the spring and summer months." He added that newly laid-off workers may not be rehired as quickly as businesses evaluate their plans to navigate an expected mild recession in the latter half of the year.
On Thursday, another economic report revealed that growth in the fourth quarter of 2022 was slightly weaker than previously estimated. The final Commerce Department reading showed a 2.6% annualized growth rate, a minor decrease from the prior 2.7% estimate, primarily due to downward revisions in consumer spending and exports. The Atlanta Fed's GDPNow tracker predicts GDP growth of 3.2% for the first quarter of 2023. Markets showed little reaction to the new data, with Wall Street futures pointing to a higher open.
