WASHINGTON, April 6 (Reuters) – The number of Americans filing new claims for jobless benefits fell last week, but the picture of the labor market remained unclear following revisions to earlier data after the government updated a model it uses to adjust for seasonality. Up and Down.
Initial claims for state unemployment benefits fell 18,000 to a seasonally adjusted 228,000 in the week ended April 1, the Labor Department said Thursday. Data for the previous week was revised to show that 48,000 more applications were received than previously reported. Economists polled by Reuters had forecast 200,000 claims in the latest week.
The government revised data for some earlier years and introduced new seasonal factors for initial and continuing claims. These will be available to the public in the afternoon.
Economists attributed the pandemic-related distortions to seasonal factors, a model the government uses to remove seasonal fluctuations from the data, among several factors that have kept claims low in high-profile layoffs in the technology sector and some interest-rate-sensitive sectors. .
Goldman Sachs said in a note that distortions in seasonal factors “depressed seasonally-adjusted initial claims by 40,000-50,000 and masked a rise of about 45,000 in the official series from earlier this year.”
Employers are generally reluctant to send workers home after struggling to find workers following the COVID-19 pandemic. The labor market is expected to ease in the second quarter as firms respond more to a slowdown in demand spurred by a Federal Reserve interest rate hike.
Credit conditions have also tightened following the recent failure of two regional banks, which could make financing difficult for small businesses and households.
Small businesses such as restaurants and bars are key drivers of job growth. Surveys from the Institute for Supply Management this week said labor market margins are shrinking.
Labor market relaxation
The Labor Department reported on Tuesday that employment fell below 10 million at the end of February for the first time in nearly two years. Still, there were 1.7 job openings for every unemployed person in February, making it easier for some laid-off workers to quickly find work.
In the week ended March 25, the number of people receiving benefits, a proxy for hiring, rose by 6,000 to 1.823 million after the initial week of aid, the claims report showed.
The claims data had no bearing on the March employment report due out on Friday. Nonfarm payrolls may have increased by 239,000 jobs in March after rising 311,000 in February, according to a Reuters poll of economists. The unemployment rate is forecast to remain unchanged at 3.6%.
Cooler labor market conditions will allow the Fed to halt its cycle of rapid interest rate hikes since the 1980s.
The U.S. Federal Reserve raised its benchmark overnight interest rate by a quarter of a percentage point last month, but indicated it was on the verge of pausing further rate hikes due to financial market turmoil. The central bank has raised its policy rate by 475 basis points since last March from near zero to the current range of 4.75%-5.00%.
Signs that the labor market is losing momentum were underscored by a separate report released Thursday by global employment agency Challenger, Gray & Christmas, which showed that U.S.-based employers reported 89,703 job cuts in March, a 15% increase from February. Layoffs rose 319% on a year-over-year basis in March, focused on the technology sector.
Layoffs this year have been blamed on a variety of factors, including market or economic conditions, cost-cutting, store or department closings and financial loss. Businesses also have little incentive to hire workers.
“As rate hikes continue and companies rein in costs, the large-scale layoffs we’re seeing will continue,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas.
Report by Lucia Mudigani; Editing by Chisu Nomiyama
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