US jobless claims likely hit a 2022 low last week as the red-hot labor market shows some signs of cooling in the near term.
The Labor Department is set to release its latest weekly jobless claims report at 8:30 a.m. Thursday. Here are the key metrics expected from print, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ending March 19: 210,000 expected, 214,000 during the prior week
Issued Claims, Week Ended March 12: 1.400 million expected, up from 1.419 million during the prior week
At 210,000, the expected number of new unemployment claims would at least represent back-to-back weeks of further decline from the end of last year. Continuing claims are expected to decline further after reaching just 1.419 million last week – the lowest level since February 1970.
The labor market remains a point of strength in the US economy, with job openings still high but falling below record levels as more workers rejoin the labor force.
Going forward, however, some economists warned that new cases of a rapidly spreading sub-version of Omicron, known as BA.2, could at least temporarily halt mobility and economic activity across the country. can interrupt. As of this week, about one-third of COVID-19 cases in the US have been attributed to the subclinical variant, although new infections overall are still running well below January’s record high. The impact on the labor market – and in particular on demand in the services sector – remains to be seen.
“Right now, US cases are in the sweet spot between the bottom of the initial Omicron wave and the imminent explosion in BA.2 cases, but this probably won’t be around for long,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. A note this week. “Our bet… is that the impending BA.2 wave will trigger a modest but visible pull-back in the discretionary services sector, leading to a reduction in consumption in the first month of Q2.”
Still, many economists and policymakers have pointed out that the labor market suffered prior disruptions caused by the Omicron wave earlier this year. Non-farm payrolls grew higher than expected in January and February each, despite the outbreak.
And Federal Reserve Chairman Jerome Powell reiterated his assessment of labor market strength earlier this week, just days after calling the current job market “tight at unhealthy levels” in his post-Fed meeting press conference last week.
“There is substantial momentum in the labor market. Employment growth through the tough Omicron wave added 1.75 million jobs over the past three months,” Powell said in a speech Monday. “By many measures, the labor market is extremely tight, much tighter than the very strong job market just before the pandemic.”
Labor market tightness has also strongly informed the Fed’s decisions to tighten monetary policy, with the economy showing clear signs of strength and ability to handle less accommodative financial conditions. Last week, the Fed raised interest rates by 25 basis points in its first rate hike since 2018. And St. Louis Fed Chairman Jim Bullard, the only dissident of that decision, who last week called for a more aggressive 50 basis point hike, justified his vote given the strength of the US labor market despite decades of high inflation rates. .
“The US labor markets today are stronger than they are in a generation already,” Bullard said in a statement.
The Federal Open Market Committee is scheduled to convene on May 3 and 4.
This post will be updated with the results of the Labor Department’s weekly preliminary jobless claims report Thursday at 8:30 a.m. ET. Check back for updates.
Emily McCormick is a reporter for Yahoo Finance. Follow him on Twitter: @emily_mcck
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