Last week, there was an unexpected decrease in the number of Americans applying for new unemployment benefits, indicating that job growth in February likely continued at a strong pace.
For the week ending February 17, initial filings for state unemployment assistance decreased by 12,000 to a seasonally adjusted figure of 201,000, according to the Labor Department’s announcement on Thursday. This came in below the predictions of economists surveyed by Reuters, who had anticipated 218,000 new claims for that week.
Despite notable layoffs at the beginning of the year, the number of claims remains at near-historic lows, reflecting a general hesitancy among employers to cut jobs due to the labor shortages experienced during and post the COVID-19 pandemic. Moreover, an increase in worker productivity and ongoing economic growth, despite significant rate hikes by the Federal Reserve, have contributed to this trend.
The minutes from the Federal Reserve’s policy meeting on January 30-31, which were released on Wednesday, revealed that officials still see the labor market as “tight.” However, some pointed out that the recent job additions were mainly in certain sectors, raising concerns about potential employment outlook risks.
Since March 2022, the Federal Reserve has increased its policy rate by a total of 525 basis points, bringing it to the current range of 5.25%-5.50%.
The claims data coincides with the period when the government conducts its survey for the nonfarm payrolls part of February’s employment report, which follows January’s addition of 353,000 jobs.
Additionally, the report highlighted that the number of individuals receiving benefits after their initial week of aid, an indicator of hiring levels, dropped by 27,000 to 1.862 million for the week ending February 10.