According to the Labor Department, for the week ended March 18, U.S. jobless claims went up by 15,000 to reach 258,000 in total. This represents a seven-week high for this economic statistic and casts doubt on economic data showing the strength of the labor market.
A Bloomberg survey showed a median forecast of 240,000. According to the data, the major jump in jobless claims happened in Ohio and Kansas. Ohio increased by 4,260 while Kansas claims went up by 2,774. The Labor Department emphasized that there be nothing unusual in the data. The Labor Department also said that no states were estimated last week.
The data covered the government survey of employers for their nonfarm payrolls report. Between the months of February and March, the average of jobless claims dropped by 7,750 which reflects strong job increases for the month.
Regarding a four-week moving average of jobless claims, it rose only by 1,000. This measure is seen to be a good indicator of labor market patterns because it removes week-to-week volatility.
Regarding continuing jobless claims which are the number of unemployed people already getting assistance from the government dropped by 39,000 for the week ended March 11. Total continuing jobless claims are now down to 2 million.
Despite this increase in jobless claims, the labor market continues to tighten, and wages are gradually increasing. Companies are also starting to struggle in finding skilled workers. Also, companies are less inclined to dismiss workers and instead are looking to hire.
Bank of America and Merrill Lynch economists have noted that much of the optimism in the economy is driven by the older, middle-income Americans.
An average of 236,500 jobs was added in January and February. Last year, the average was about 180,000 jobs. The unemployment rate also dropped to 4.7% for the month of February from 4.8% the previous month.
Economists consider U.S. job claims below 300,000 to be a healthy labor market. This week’s reading also marks 80 consecutive weeks that the filings are below 300,000. The labor market is currently very near to full employment. This stretch is also the strongest for America since 1970. In that year the labor market was much smaller.
The labor market data reported have a one-week lag.
The Labor Department also reported that the unemployment rate among people that are allowed to apply for the jobless claims has dropped to 1.4% from 1.5%.
As a result of the improvement in the labor market, the Fed increased interest rates last week. Another reason for the Fed hike was the creeping inflation which is also a sign of a recovering economy.
Investors turn now their attention to Trump’s first significant test of getting a healthcare bill to be passed in Congress. This healthcare bill is sponsored by the Trump’s political party of Republicans. U.S. stock index futures are modestly higher while U.S. Treasuries prices are lower. The dollar strengthened a bit versus a basket of currencies. Gold, on the other hand, remained steady.