The number of Americans filing new claims for unemployment benefits increased more than expected last week as labor market conditions gradually improved. The Labor Department said on Thursday that initial claims for state unemployment benefits rose by 9,000 to a seasonally adjusted level of 221,000 for the week ended March 30. Claims ranged between 212,000 and 210,000 for most of March. Government data this week showed that there were 1.36 job openings for every unemployed person in February compared to 1.43 in January.
Labor shortages continue in industries such as construction despite layoffs rising to a 14-month high in March, though job cuts have not changed much compared with the same period last year.
Labor market flexibility is a cornerstone of the economy, with gross domestic product growing at an annual rate of 3.4% in the fourth quarter. Growth estimates for the first quarter are at 2.8%. This strength, coupled with persistent inflation, could lead to the Federal Reserve postponing the interest rate cut that had been anticipated.
Federal Reserve Chair Jerome Powell confirmed on Wednesday that the central bank has time to consider its first interest rate cut, signaling the economy’s resilience and high inflation. Since March 2022, the Federal Reserve has raised the interest rate by 525 basis points to the current range of 5.25% to 5.50%.
