The US Economy Is Flexing Its Muscles: Unemployment Benefits Have Fallen To A 52-year Low; Factories Are Humming

Weekly jobless claims fall from 15,000 to 214,000
Continuing claims fell 71,000 to 1.419 million.
The number of new buildings in February increased by 6.8%
Manufacturing output jumped 1.2% in February

WASHINGTON, March 17 – The number of Americans filing new jobless claims fell last week as labor demand remains strong, giving the economy a chance for another month of solid job growth.

Unemployment claims were the lowest in 52 years in early March, the Labor Department’s weekly report on jobless claims showed on Thursday. Signs of the underlying strength of the economy amid rising inflation and geopolitical tensions were also evident in other reports showing a pickup in manufacturing output last month and a sharp rebound in housing construction.

The Federal Reserve on Wednesday raised the discount rate by 25 basis points, the first increase in more than three years, and laid out an aggressive plan to bring borrowing costs to a restrictive level by 2023. The US central bank said that Russia’s war against Ukraine “is likely to create further upward pressure on inflation and dampen economic activity.” More

“The Russian invasion of Ukraine adds some uncertainty to forecasts as energy prices soar and business and consumer sentiment take a hit,” said Dante DeAntonio, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “However, we expect firms to mostly look beyond short-term volatility, especially given the continued difficult hiring conditions.”

Initial claims for state unemployment benefits fell by 15,000 to a seasonally adjusted 214,000 for the week ended March 12. Economists polled by Reuters had forecast 220,000 applications for the last week. A drop of 16,006 claims in New York wiped out notable gains in Michigan, California and Ohio.

Claims have come down from a record high of 6.149 million in early April 2020. The three-week Russian-Ukrainian war poses a risk to the US labor market due to supply chain disruptions and record high gasoline prices. As companies hunger for labor, economists are optimistic that the labor market and economy will weather the storm.

At the end of January, 11.3 million vacancies were opened, while there were 1.8 vacancies per unemployed person. This mismatch between labor demand and supply is driving up wages, which should provide households with some protection against a sharp rise in gasoline prices.

Fed Chairman Jerome Powell on Wednesday called the labor market “extremely” tight, telling reporters that “we think this labor market can withstand, as I mentioned, tighter monetary policy, and the economy as a whole can.”

Unemployment claims

As long as the economy holds up. A second report from the Federal Reserve Bank of Philadelphia, released Thursday, showed that business activity in the mid-Atlantic region accelerated in March, with manufacturers reporting strong growth in new orders as well as shipments.

Factories in the region spanning eastern Pennsylvania, southern New Jersey and Delaware have hired more workers and increased hours. However, they continued to struggle with higher raw material prices and delays in receiving materials, leading to long back orders.

Strong production was also underscored by the Fed’s third report showing production rose 1.2% in February despite a 3.5% drop in auto production due to continued global shortages of electronic components. More

“The impact of the Russian invasion on Ukraine, while largely unreported in this February report, could exacerbate supply issues, but our analysis suggests only a minimal direct impact on production,” said Shannon Seery, an economist at Wells Fargo in New York.

Shares on Wall Street traded higher. The dollar fell against a basket of currencies. US Treasury bond prices rose.

Philadelphia

STRONG HOUSING

Last week’s claims data covers the period during which the government polled businesses for the nonfarm payroll component in the March employment report. Applications dropped significantly between the survey periods in February and March, which heralds a surge in jobs this month.

In February, 678,000 jobs were created in the economy. Employment growth was supported by the return of some workers to the labor market amid a significant decrease in the incidence of COVID-19.

More employees may return to work this month. The Claims Report showed that the number of people receiving benefits after the first week of relief fell from 71,000 to 1.419 million in the week ending March 5, the lowest number since February 1970.

The upbeat data was expanded by the Commerce Department’s fourth report showing housing construction jumped 6.8% to a seasonally adjusted annualized rate of 1.769 million units in February, the highest level since June 2006.

While future home building permits fell 1.9% to 1.859 million units, they were close to a nearly 16-year high hit in January, suggesting a severe home shortage will continue to support housing construction. even with rising mortgage rates.

Single-family housing construction, which accounts for the largest share of residential construction, jumped 5.7% to 1.215 million units last month. Home project launches with five or more units rose 0.8% to 501,000.

Housing start

The backlog of homes approved for construction that have not yet begun has reached a record 273,000 units as builders grapple with shortages and very expensive materials. More

“The record high number of units that have been approved but not commissioned, combined with permit data, suggests that residential construction will continue to pick up growth in the coming months to the extent that builders can battle supply constraints,” said Conrad DeQuadros. , senior economist at Brean Capital in New York.

Following the data, the Atlanta Fed raised its estimate of GDP growth in the first quarter to 1.3% year on year from 1.2%. He steadily raised his forecast from the 0.5% cut at the end of February. In the fourth quarter, the economy grew at a solid pace of 7.0%.

Reporting by Lucia Muticani; Editing by Chizu Nomiyama and Andrea Ricci

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