The number of Americans filing new claims for unemployment fell again last week, indicating sustained labor market strength that could keep the Federal Reserve from raising interest rates.
Initial claims for state jobless benefits fell 2,000 to 190,000 for the week ended Feb. 25, the Labor Department reported on Thursday. It was the seventh week in a row that claims remained below 200,000. Economists polled by Reuters had forecast 195,000 claims for the latest week.
There is still no sign that the high-profile layoffs, mostly in the technology sector, have had a material impact on the labor market, with economists and policymakers saying these companies are overhired during the pandemic and are not representative of the overall economy. Economists also speculated that the severance package prevented some laid-off workers from filing claims.
"It is possible that early claims may not fully capture layoffs of highly paid workers who may not be eligible for unemployment benefits based on the layoff or may not file for benefits for other reasons," said Veronica Clark, an economist at Citigroup.
The resilience of the labor market and high inflation have increased the likelihood that the Fed will raise interest rates at least three more times this year rather than twice. U.S. central bank has raised its policy rate by 450 basis points since last March from near zero to a range of 4.50%-4.75%, with most of the increase between May and December.
The number of people receiving benefits after the initial week of aid fell by 5,000 to 1.655 million in the week ending Feb. 18. These data are continuous claims data, a proxy for employment, covering the period in which the government surveys households for the February unemployment rate.
Continued claims were little changed between the January and February survey periods. The unemployment rate at 3.4% in January was the lowest in more than 53 years. Economists expect strong employment growth in February, although the pace may slow from 517,000 jobs in January.
