WASHINGTON (Reuters] – The new U.S. applications for jobless benefits declined to a 52-1/2 year low while Americans still remained on the unemployment rolls. These numbers point to a decreasing labor market that will allow wage inflation to rise.

According to the Labor Department, initial claims for unemployment benefits decreased 28,000 to 187,000 in the week ending March 19, a seasonally adjusted figure of 18.7k. This was the lowest since September 1969. Reuters polled economists and predicted 212,000 claims for the week ending March 19. The number of claims has fallen from 6.149million in April 2020, a record.

It is not clear that Russia’s ongoing war with Ukraine has had an impact on the labor market.

Businesses are looking for employees. At the end January there were 11.3million job opportunities, and 1.8 unemployed people had open jobs.

The misalignment in demand and supply of labor is driving wage growth. This is helping households to cushion against rising gasoline prices as well as contributing to high inflation.

Last week, the Federal Reserve raised its policy rate by 25 basis point. This is the Federal Reserve’s first increase in over three years. Jerome Powell, Fed chair, stated Monday that the U.S. central banking must “expectiously” raise interest rates but possibly more aggressively to stop high inflation.

According to the claims report, the total number of beneficiaries after the first week of assistance fell 67,000 to 1.350million during the week ending March 12. This is the lowest figure since January 1970. These so-called continuing claims data were collected during the time the government interviewed households about March’s unemployment rates.

Continued claims decreased between February and March surveys. In February, the unemployment rate was 3.8% which is a new low after two years.