The government's weekly jobless claims for unemployment aid increased by a little more than predicted for the week ended March 5. The numbers of the claims were 227,000. It was about ten thousand more than experts predicted for this week. The continuing weekly claims were at 1.49 million, which was slightly more than the previous week. The increase in the weekly jobless claims shows a wider declining trend of the numbers after the raging coronavirus earlier this winter because of the Omicron variant. The infections had hindered the ongoing recovery of the labor market at the beginning of the year. The Labor Department reported the weekly jobless claims. In the last week of February, the claims fell to their lowest mark since the start of the year. It was a mark that was better than what the experts had predicted.
The mark of the claims was also the lowest level since the end of the previous year. At that time, the claims were around the two hundred thousand mark. The experts surveyed said that the latest mark was going to be lower than the final outcome. The experts at Bank of America had predicted a bigger fall this week. So, the rise signals that there is still tightness in the labor market. According to the experts, firms are continuing to hold on to their existing workers. The recent filings are still at a lower level than the surge in mid-January because of the Omicron variant. Many of the workers in the country had started applying for jobless claims. This was after the economy had seen a growth in seasonal hiring at the end of the year. The impact of the coronavirus has been minimized a lot now. But the economic impact of the war between Russia and Ukraine is still not clear.
In his testimony in Congress in the previous week, the Federal Reserve chairman Jerome Powell said, "Labor demand is very strong, and while labor force participation has ticked up, labor supply remains subdued. As a result, employers are having difficulties filling job openings, an unprecedented number of workers are quitting to take new jobs, and wages are rising at their fastest pace in many years." Chief economist at Wrightson ICAP Lou Crandall said, "We still think that is the most likely outcome, but there is a risk that energy passthrough effects from the latest spike in oil prices will slow that process. Exactly how the Fed will balance the impact of higher oil prices on the inflation data against the 'energy tax' hit to incomes and real spending remains unclear."
Economic analyst of Bankrate Mark Hamrick said the inflationary pressures are still present in the economy, and there are also growing supply system shocks. This will have a great negative impact on the overall economy. High Frequency Economics chief US economist Rubeela Farooqi said that the swiftly improving conditions in the labor market would continue for some time. The wider gauge of the US workforce of the Labor Department is the employment report. The report for February said that more than half a million jobs had been added in the previous month. This was the highest mark in the past one-and-a-half years. Employment has grown in the currently tight labor market.
The improving conditions in the labor market are great for households in the country. But the trends have gained the nation's attention back to the Federal Reserve. The high number of job openings has made space for huge leverage for the workers. This has led to high wage gains and increased the already high inflationary pressures on the economy. The average hourly earnings had declined in the previous month. Still, it increased to more than five percent on a year-over-year basis. Jerome Powell said that the other policymakers in the Federal Reserve would also agree that the present conditions in the labor market are in line with the conditions of maximum employment. Consequently, he is going to lend his support to a small increase in the interest rates after the next meeting of the Federal Reserve that is going to be held in some time.
Mark Hamrick said, "With seemingly no shortage of sources of turmoil in our world, the US job market has, at least so far, remained a source of relative strength and stability. The recent shocking surge in gasoline prices, if sustained, will serve as a costly tax on consumers. How much that slows economic momentum in the coming days, weeks and beyond, is difficult to precisely gauge and predict at this point." Chief economist at Pantheon Macroeconomics Ian Shepherdson said, "The trend is still falling, unwinding the hit from the Omicron Covid wave, and claims likely will drop next week. The pre-Omicron low was [188,000] in the first week of December; we expect that to be reached again by late March."
The decline in the unemployment rate shows that there has been a big decrease in unemployment to its lowest mark since the start of the pandemic. The firms in the country had a near-record mark of open employment a couple of months ago. This has helped the pay of the employees. The average hourly pay has also grown in the previous month, compared to twelve months earlier. This represents a swift growth that forces firms to increase their efficiency or increase their costs to offset the labor costs that are quite high right now. The economy of the country had an expansion rate that was the highest in the past forty years. The previous mark was also after a recession.
Consumer inflation has seen a great increase over the past year because of the increasing cost of housing, food, and gas. This is the biggest increase in the past forty years and is going to bring even greater prices in the near future. The present increases that have been reported by the Labor Department did not include most of the growth in the gas and oil costs that happened after the invasion of Ukraine by Russia a couple of weeks ago. The chief global strategist at JPMorgan Funds, David Kelly, said that if the gas prices went to more than four dollars for the year, it would lead to an addition of more than nine hundred dollars to the costs of the usual household in the nation. The war between Ukraine and Russia has also led to an increase in the costs of wheat and other commodities. It will keep inflation very high in the coming months.
The houses with less income are getting affected by inflation as they are spending more of their income on domestic supplies. Chief US economist at NatWest Markets, Kevin Cummins, said, "Our estimates suggest gasoline and natural gas prices are on track to add over 1 full percentage point or so to overall year-on-year prints in each month over the next ten months." US economist with Oxford Economics Mahir Rasheed said, "Despite the uptick, we expect initial claims to continue to grind back toward [200,000]. Layoffs are expected to be minimal in a tight labor market where employers continue to face difficulty hiring workers." Chief economist at FWDBONDS, Christopher S. Rupkey, said, "At the moment, the financial market turbulence and coming slowdown in Europe's economy after Russia invaded Ukraine has no spillover effect in the US."
The increase in the weekly jobless claims is not something out of the ordinary. It is a part of the usual fluctuations that happen week after week. The gains can be due to several temporary layoffs in the education sector. It can also be due to the spring break for several schools. The graph of the new jobless claims shows that there have been low levels of layoffs. This is because the firms continue to hold on to the current workforces. The robust demand for labor also shows good demand for services and goods. This shows that the economic recovery of the nation is still quite good. But the war between Ukraine and Russia and inflation, driven by the increasing prices of oil because of the conflict, may lead to a slowdown in the economy's growth. There is also a chance that the central bank will increase the interest rates in the coming days to fight against inflation.