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U.S. weekly jobless claims fall; unemployment rolls lowest in 52 years -Breaking


© Reuters. FILE PHOTO – A sign advertising job opportunities is displayed at the restaurant’s entrance in Miami, Florida on May 18, 2020. REUTERS/Marco Bello/File Photo

By Lucia Mutikani

WASHINGTON (Reuters] – The average number of Americans who filed new unemployment claims last week fell modestly, but it still suggests strong job growth in April.

On Thursday, the Labor Department reported that the number of unemployed rose to its lowest level for 52 years. It also confirmed the tightening labor market. Inflation is fuelled by a severe shortage in workers, which keeps the number of layoffs down, prompting the Federal Reserve’s to take a more restrictive monetary policy.

Christopher Rupkey from FWDBONDS, New York, said that “Jobless claims near record lows means worker wages will keep going up and up. This guarantees that inflation remains more persistent, at more worrisome rates for longer than Fed officials think.”

The week ending April 16 saw initial claims for state unemployment benefits fall by 2,000 to an adjusted 184,000. The prior week’s data was updated to reflect 1,000 additional applications than originally reported.

Reuters polled economists and forecast 180,000 application for the week ending March 19. The week ended March 19 saw claims fall to 166,000, a record low for 53 years. The chances of further declines are likely to be limited.

The number of applications dropped by 7.656 last week in Missouri. The declines were notable in Ohio, Texas and New York, as well as Michigan. These decreases offset the increases in Connecticut, California, and Texas.

In March, 25 basis point were added to the Fed’s policy interest rates. It was their first hike in three years. Economists expect a half-percentage-point rate increase next month, and for the U.S. central bank to soon start trimming its asset holdings.

The drop in claims from 6.137million at the beginning of April 2020 is a significant indicator that rising borrowing costs may be reducing demand.

Demand for labor has been strong so far. Based on data collected from central bank business contacts on or before April 11, the Fed’s Beige Book showed Wednesday that there was “continued strong demand for labor across most districts” but also noted that the “hiring of workers was delayed by the general lack of workers.”

End of February saw a record 11.3million job openings. Just one-tenth the percentage point higher than its pre-pandemic peak, 3.6% is now the unemployment rate.

However, there are some signs that labor supply is on the rise. In the claim report, 58,000 people received benefits in the initial week. This dropped to 1.417 millions during the week that ended April 9. This was the lowest number of continuing claims since February 1970.

The claims data for last week covered the time that the government conducted a survey of business establishments to determine if they were eligible to receive the April nonfarm payrolls portion of the employment report. The March and April payrolls survey periods saw marginal increases in claims.

According to economists, April will see strong employment growth. The 11th consecutive month with more than 400,000 jobs added to the payrolls in March marked a 431,000 job increase.