New Claims 228,000
Previous Week 246,000
Continuing Jobless Claims 1,823,000
Up from 1,817,000 in previous report.
The Labor Department reported Thursday that unemployment benefit applications rose to 228,000 last week. The Federal Reserve’s efforts to tighten monetary policy to slow economy-wide spending and bring down inflation may be causing the unusually strong labor market to react, as rising jobless claims are a proxy for layoffs. Additionally, the collapse of Silicon Valley Bank is creating upheaval in the banking system.
The Bureau of Labor Statistics Job Openings and Labor Turnover Survey updated Tuesday revealed that there were about 9.9 million job openings across all sectors in February, marking the first time in nearly two years that the number of openings fell below 10 million. ADP’s announcement on Wednesday that private-sector hiring decelerated last month further indicates that the labor market is finally beginning to soften in response to the barrage of rate revisions, the most recent of which was a quarter of a percentage point increase in the Fed’s target rate last month.
Payrolls rose by only 145,000 in March, down from 261,000 in February, according to ADP, well below expectations. This trend, coupled with the drop in job openings, means that the Fed is less likely to raise rates again in May. After the JOLTS report and ADP report, CME Group’s FedWatch tool assigned a 56% chance that the Fed will pause rate hikes, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed.
Job Openings Fall Below 10 Million, First Time in 2 Years
The signal from the big drop in job openings reported yesterday reinforces the slower employment growth in the ADP report. The labor market is getting less tight, which is one of the Fed’s conditions for pausing its interest rate hiking campaign. However, the Fed also wants to see core inflation slow more. If next week’s inflation reports come in hotter than expected, the Fed might still hike their policy rate a quarter percentage point at their next decision in May.
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