The number of Americans applying for unemployment benefits this month fell to its lowest level in 52 years as the US job market continues to show strength in the midst of rising inflation and the ongoing virus pandemic.
Jobless claims fell by 28,000 to 187,000 for the week ending March 19, the lowest since September of 1969, the Labor Department reported. However, that number ticked higher to 202,000 for the week ended March 26.
The four-week average for jobless claims, which compensates for weekly volatility, fell to 188,000 for the week ended March 19 and rose to 202,000 for the week ended March 26.
In total, 1,350,000 Americans – a more than 50-year low – were collecting jobless aid in the week ended March 12.
Meanwhile, Americans continued to switch jobs at near-record rates in February, with 4.4 million workers leaving their positions in a historically tight labor market. Employers hired 6.7 million people that month while reporting a continued 11.3 million job openings, according to a report released Tuesday by the Bureau of Labor Statistics.
Interestingly, Americans who switched jobs recently saw a typical raise of 6.6% in the past year, while those who stayed put saw their pay go up 5.4% as employers sought to keep them, according to a widely watched measure of wage growth from the Federal Reserve Bank of Atlanta. Both numbers, reported as three-month averages, are at or near the highest rates since the late 1990s.
Earlier this month, the government reported that employers added a robust 678,000 jobs in February, the largest monthly total since July. The unemployment rate dropped to 3.8%, from 4% in January, extending a sharp decline in joblessness to its lowest level since before the pandemic erupted two years ago.
US job openings fell in January, but remained near record highs as worker shortages persisted, pointing to a continued tight labor market that will keep generating strong wage gains and contribute to keeping inflation high.
Job openings, a measure of labor demand, dropped 185,000 to 11.263 million on the last day of January, and were virtually unchanged in February, the Labor Department said on Wednesday in its monthly Job Openings and Labor Turnover Survey (JOLTS) report.
The JOLTS report also showed the number of people voluntarily quitting their jobs decreased by 151,000 to a still-high 4.3 million in January.
In January, vacancies fell in several industries, with accommodation and food services reporting a 288,000 drop. In the transportation, warehousing, and utilities industry, job openings fell 132,000, while unfilled positions in the federal government decreased 60,000.
Yet job openings increased 136,000 in other services businesses. The durable goods manufacturing industry reported 85,000 more job openings. Overall, the job openings rate dipped to 7.0% from 7.1% in December.
Fewer people quit in retail trade and information sectors, but more left their jobs in finance and insurance. The quits rate fell to 2.8% from 3.0% in December. The revisions also showed 47.8 million quit their jobs in 2021.
“Before the pandemic, quits accounted for 50% of all job separations, on average,” said Julia Pollak, chief economist at ZipRecruiter. “In 2021, however, they made up 70%, a sign that workers had more job security than usual and were largely the ones calling the shots.”
In its latest report on Tuesday, the Labor Department reported the number of unfilled job openings was little changed at 11.3 million on the last business day of February. Hires edged up to 6.7 million while total separations were little changed at 6.1 million.
Within separations, the quits rate was little changed at 2.9% and the layoffs and discharges rate was unchanged at 0.9%. This release includes estimates of the number and rate of job openings, hires and separations for the total nonfarm sector, by industry, by four geographic regions and by establishment size class.
The bottom line is it is possible we have seen the high in unfilled job openings with the peak last summer however, it is still premature to make such a conclusion. We’ll have to see how this turns out in the months ahead. More details to follow.
Finally, unrelated to the drop in new applications for unemployment benefits, the Federal Reserve launched a high-risk effort last week to tame the worst inflation since the early 1980s, raising its benchmark short-term interest rate and signaling up to six additional rate hikes this year. It remains to be seen if the Fed will actually carry through on its threat of seven rate hikes this year – and if it does how negative that will be for the economy. I’ll have more to say on this topic later as well.
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