Jobless claims unexpectedly climb to highest level in three weeks
More Americans filing for unemployment benefits amid renewed recession fears
Americans picking up multiple jobs to make ends meet
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The number of Americans filing for unemployment benefits unexpectedly ticked higher last week, hitting the highest level in three weeks.
Figures released Thursday by the Labor Department show initial claims for the week ended March 25 rose to 198,000 from the 191,000 recorded a week earlier. That marks the highest level since late February, although it is still below the 2019 pre-pandemic average of 218,000 claims.
Continuing claims, filed by Americans who are consecutively receiving unemployment benefits, rose slightly to 1.68 million for the week ended March 18, an increase of 4,000 from the previous week. One year ago, nearly 1.9 million Americans were collecting unemployment benefits.
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Job seekers visit booths during the Spring Job Fair at the Las Vegas Convention Center on April 15, 2022. ((K.M. Cannon/Las Vegas Review-Journal) / Getty Images)
The labor market remains an unsolved puzzle in the Federal Reserve's campaign to raise interest rates and slow the economy. Layoffs are on the rise, but job openings remain near a record high. Private-sector hiring rose faster than expected in February, but jobless claims are also ticking higher.
Central bank officials have made it clear that they expect unemployment to climb as a result of higher rates, which could force consumers and businesses to pull back on spending. Job losses are "very likely," Fed Chairman Jerome Powell told lawmakers earlier in March.
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Projections from the central bank's March meeting show that officials expect unemployment to rise to 4.6% by the end of next year, up from the current rate of 3.5%.
A "Now Hiring" sign during a job fair at a Schneider Electric manufacturing facility in Hopkins, South Carolina, US, on Wednesday, Jan. 18, 2023. (Photographer: Micah Green/Bloomberg via Getty Images / Getty Images)
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That could mean more than 1 million Americans lose their jobs between now and the end of 2023.
Policymakers have already approved nine consecutive rate increases and have opened the door to a 10th increase at their next meeting in early May, although they have stressed the importance of upcoming economic data releases – including the March jobs report.
"A tick up in jobless claims within the context of a downward-revised GDP could suggest Fed action is taking its toll, but it’s important to keep in mind that those claims are still relatively low, and GDP still shows growth," said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. "Today’s data may have some investors more willing to see the light at the end of the tunnel for rate hikes but remember a multitude of data will be released before the Fed’s next decision."