Initial jobless claims last week were slightly higher than expected but still reflect a labor market where employers are reluctant to lay off workers.
First-time claims for benefits in the week ended April 16 totaled 184,000 for the week, down 2,000 from the previous week but just above the Dow Jones estimate of 182,000, the Labor Department reported Thursday.
The figures suggest that the US employment situation remains tight historically, with job vacancies exceeding the available labor pool by about 5 million.
Continuing claims, a week behind the headline, fell 58,000 to 1.417 million, the lowest since February 21, 1970.
A separate economic report on Thursday showed that production in the Philadelphia area expanded in April, but at a slower pace than expected.
The Philadelphia Federal Reserve’s monthly manufacturing index recorded a reading of 17.6, showing the difference between companies that are expanding versus declining. That was down almost 10 points from March and below the Dow Jones estimate of 21.9.
Gauges for new orders, shipments, unfulfilled orders, delivery times, and employee average work week all showed declines from March. However, prices both paid and received increased, reflecting ongoing inflationary pressures, while the employment index also rose.
On Wednesday, the Fed noted in the Beige Book summary of US economic conditions that companies are struggling to find workers.
“Demand for labor has remained strong in most districts and industrial sectors. But hiring was held back by the general shortage of available labor, although several districts reported signs of modest improvement in labor availability,” the report said. “Many companies reported significant turnover as workers left for higher wages and more flexible work schedules.”
Fed officials are reacting to the inflation spike with an expected series of rate hikes that they hope will not derail the two-year economic recovery. Markets expect the Fed’s overnight interest rate to rise to around 2.5% this year from near zero where it was at the start of 2022.
The number of jobless claims reflects the continued progress in hiring. The total number of beneficiaries dropped to 1.62 million as of April 2nd. A year ago that total was 17.4 million, a number that has declined as the government curtailed expanded unemployment benefits and accelerated hiring following the release of Covid vaccines and a sharp drop in virus cases.
Still, the labor market has not quite reached its pre-pandemic self.
Although the unemployment rate has fallen to 3.6%, 408,000 fewer Americans are working than they were in February 2020, just before the pandemic hit. The labor market is also 174,000 smaller and the participation rate is a full percentage point below pre-Covid levels.