Initial jobless claims last week were a bit higher than expected but still reflective of a labor market where employers are loathe to fire workers.
First-time claims for benefits in the week ended April 16 totaled 184,000 for the week, a decline of 2,000 from the previous week but just ahead of the Dow Jones estimate for 182,000, the Labor Department reported Thursday.
The numbers indicate that the U.S. employment picture remains historically tight as job openings outnumber the available labor pool by about 5 million.
Continuing claims, which run a week behind the headline number, fell by 58,000 to 1.417 million, the lowest level since Feb. 21, 1970.
A separate economic report Thursday showed that manufacturing expanded in the Philadelphia area in April, but at a slower pace than expected.
The Philadelphia Federal Reserve’s monthly manufacturing index registered a 17.6 reading, representing the difference between companies seeing expansion vs. contraction. That was a decline of nearly 10 points from March and below the Dow Jones estimate of 21.9.
Measures of new orders, shipments, unfilled orders, delivery times and the average employee work week showed declines from March. However, prices paid and prices received both increased, reflecting continued inflation pressures, while the number of employees index also gained.
On Wednesday, the Fed’s “Beige Book” summary of economic conditions around the U.S. noted the difficulty companies are having finding workers.
“Demand for workers continued to be strong across most Districts and industry sectors. But hiring was held back by the overall lack of available workers, though several Districts reported signs of modest improvement in worker availability,” the report said. “Many firms reported significant turnover as workers left for higher wages and more flexible job schedules.”
Fed officials are responding to the inflation surge with an expected series of interest rate hikes that they hope won’t derail the 2-year-old economic recovery. Markets expect the Fed’s benchmark overnight borrowing rate to rise to about 2.5% this year from near-zero where it stood at the outset of 2022.
The jobless claims numbers reflect the continued progress of hiring. The total of those receiving benefits dropped to 1.62 million, as of data through April 2. A year ago, that total was 17.4 million, a number pared as the government has restricted extended unemployment benefits and as hiring accelerated following the release of Covid vaccines and a sharp drop in virus cases.
Still, the labor market hasn’t quite caught up to its pre-pandemic self.
Even though the unemployment rate has fallen to 3.6%, there are 408,000 fewer Americans working than in February 2020, just before the pandemic hit. The labor market also is smaller by 174,000 and the labor force participation rate is a full percentage point below its pre-Covid level.
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