The number of Americans filing new applications for unemployment benefits took an unexpected dip last week, pointing to stable labor market conditions and a potential rebound in job growth in March.
According to figures released by the Labor Department Thursday, the weekly jobless claims report showed no impact yet on the jobs market from the dragging war in the Middle East. According to a report from Reuters, economists have warned that higher energy prices and tightening financial conditions could be a drag on the labor market.
Federal Reserve Chair Jerome Powell on Wednesday described the labor market as being in “a sort of zero employment growth equilibrium,” adding that “does have a feel of downside risk, and it’s not kind of a really comfortable balance.”
Consequently, the Fed kept its benchmark overnight interest rate in the 3.50%-3.75% range, with policymakers projecting higher inflation, a steady unemployment rate and only a single rate cut this year.
“Producers are unlikely to fire staff while there is a strong chance the jump in prices is temporary,” Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, told Reuters. “But elevated uncertainty, the recent tightening of financial conditions and high borrowing costs for small businesses will continue to weigh on hiring.”
Initial claims for unemployment benefits dropped to 205,000 for the week ended March 14, a drop of 8,000 claims. Economists polled by Reuters had forecast 215,000 claims for the latest week.
