The number of Americans submitting new unemployment benefit claims dropped more than anticipated last week, indicating ongoing labor market strength in the country.
The Labour department said on Thursday that, “Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 192,000 for the week ended March 11.”
Meanwhile, Reuters’ survey of economists predicted 205,000 claims for the most recent week.
The fall in request for unemployment benefit was not predicted owing to the financial market crises affecting the economy.
Also, considering how major technology companies have been cutting jobs in recent times around the globe.
It was reported that employers have been reluctant to layoff staff because of the struggles to get them in the first place especially during the Covid-19 pandemic.
According to Reuters, the strong labor market, as seen by 1.9 job vacancies for every unemployed person in January, and persistently rising inflation support the Federal Reserve’s decision to raise interest rates again the following week.
However, the recent collapse of Silicon Valleys Bank and Signature Bank in the country have caused fear of failure of other banks.
CME Group’s FedWatch tool revealed that, “Financial markets have wavered between the Fed hiking rates by a quarter-point and pausing its monetary policy tightening campaign when policymakers meet next Tuesday and Wednesday.”
The U.S. central bank has raised its benchmark overnight interest rate from near-zero to the current 4.50%-4.75% range. This is an increase by 450 basis points.
The claims report also revealed that for the week ending March 4, the number of people getting benefits after the first week of aid—a proxy for hiring—fell by 29,000 to 1.684 million.
The continuing claims are still at a low level, indicating that some employees who have been laid off would have little trouble finding new employment.