The number of Americans filing new claims for unemployment benefits increased by the most in five months last week, but the underlying trend remained consistent with a tight labor market.
Initial claims for state unemployment benefits rose 21,000 to a seasonally adjusted 211,000 for the week ended March 4, the Labor Department said on Thursday. That was the largest increase since October and lifted claims to a two-month high.
Economists polled by Reuters had forecast 195,000 claims for the latest week. The four-week moving average for new claims, a better measure of labor market trends as it irons out weekly fluctuations, climbed 4,000 to 197,000 last week.
“It is not clear that last week’s rise is signaling a shift in the trend,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “We do expect demand for workers to ease as the effects of restrictive monetary policy take hold and spread more broadly through the economy. But for now, layoffs remain low and job growth is strong, given companies appear to be hoarding workers.”
Claims had stayed below 200,000 for seven straight weeks, indicating that high-profile job cuts in the technology sector had not had a material impact on the labor market.
Unadjusted claims shot up 35,357 to 237,513 last week. They were boosted by a 16,363 jump in filings in New York and a 10,489 surge in California. There also notable rises in applications in Kentucky, Oregon and Ohio. But claims in Rhode Island and Massachusetts fell significantly.
Data on Wednesday showed there were 1.9 job openings for every unemployed person in January. The Fed’s Beige Book described the jobs market as remaining “solid” in February, also noting “scattered reports of layoffs” and that “finding workers with desired skills or experience remained challenging.”
With the labor market persistently tight, inflation readings strong and consumer spending robust in January, Fed Chair Jerome Powell told lawmakers this week that the U.S. central bank would likely need to raise interest rates more than expected.
Financial markets have priced in a 50-basis-point rate hike at the Fed’s March 21-22 policy meeting, according to CME Group’s FedWatch tool.
The Fed has increased its policy rate by 450 basis points since last March from near zero to a 4.50%-4.75% range.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 69,000 to 1.718 million during the week ending Feb. 25, the claims report also showed. The so-called continuing claims remain low, suggesting some laid off workers could be easily finding new work.
The claims data has no bearing on February’s employment report, which is scheduled to be published on Friday, as it falls outside the survey period.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 205,000 jobs in February after surging 517,000 in January. The unemployment rate is forecast unchanged at a more than 53-1/2-year low of 3.4%.
The labor market is, however, cooling on the margins. A report from global outplacement firm Challenger, Gray & Christmas on Thursday showed job cuts announced by U.S.-based employers fell 24% to 77,770 in February. Planned layoffs were, however, 410% higher compared to the same period last year. It was also the highest February total since 2009.
Job cuts were concentrated in the technology industry, which accounted for 28% of layoffs announced last month. Retailers and finance firms are also reducing headcount.