The number of citizens filing weekly jobless claims for unemployment decreased in the week ended March 12. The initial weekly jobless claims declined by 15,000 to a modified level of 214,000. Experts polled had predicted 220,000 applications for the week. A decrease of 16,000 claims in New York nullified the significant increases in Ohio, California, and Michigan. The number of citizens getting continuing jobless claims was 1.4 million for the week ended March 5. This was a decline of 70,000 and marked the lowest level in the past fifty years. The claims have decreased from a record high of six million in early April a couple of years ago. There were nearly twelve million job openings at the start of this year.
The war between Ukraine and Russia poses a big risk to the labor market in the country because of the record level of gas costs and the disruptions in the supply chains. Firms are actively seeking labor right now. So, experts are positive that the economy and the labor market will ride out the present storm caused by the pandemic and the war. This overall misalignment between the supply and the demand for labor is increasing wage growth. This should give a little cushion to the households in the nation against the high prices of gas. The robust manufacturing was also underlined by another report from the Federal Reserve that said that the production increased by more than one percent in the previous month. This is despite the output of motor cars decreasing by nearly four percent because of an ongoing international shortage of electronic parts.
The numbers of the weekly jobless claims for this week show good demand for labor. This has placed the economy of the nation for another month of great gains in jobs. The claims were the smallest in more than half a century earlier this month. This was according to the report of the claim by the Labor Department. There were also signals of the economy's underlying strength against the increasing inflation and the high tensions in geopolitics. These factors were seen in other reports that showed a speeding up in manufacturing production and a big reversal in homebuilding. Amidst all the chaos, the economy of the nation is going steady. Another report from the Philadelphia Federal Reserve showed that the factory activity in the mid-Atlantic region went well this month.
Manufacturers have reported good growth in the shipments as well as the new orders. Factories increased the working hours for their employees and hired more workers. But they are still continuing to struggle with the increasing input costs and delays in getting the raw materials. This has increased the overall backlog of the manufacturers. The stocks on Wall Street were trading at a higher price. The dollar saw a decline against a basket of currencies. The US Treasury prices increased.
Senior economist at Moody's Analytics Dante DeAntonio said, "The Russian invasion of Ukraine adds some uncertainty to the outlook as energy prices have spiked, and business and consumer sentiment has taken a hit. However, we expect firms to mostly look beyond the near-term volatility, especially given the difficult hiring environment that remains." Economist at Wells Fargo Shannon Seery said, "The impact of Russia's invasion of Ukraine, while mostly not reflected in this February report, could worsen supply problems, but our analysis suggests only minimal direct exposure for manufacturing."
The jobless aid information was for the time during which the Federal Government surveyed the firms for the nonfarm payrolls data for the employment report for this month. The weekly jobless claims have declined a lot between the survey periods of this month and the previous month. This is a great sign for the growth of jobs in the nation. There was a creation of nearly seven hundred thousand jobs in the previous month. Employment growth has been supported by the return of several employees to the labor force when there is a big decrease in coronavirus infections in the country. There are signs that more people could rejoin the workforce starting this month.
Senior economist at Bankrate Mark Hamrick said, "Staggeringly high inflation is set to go higher in forthcoming reports because of Russia's invasion of Ukraine and continuing supply chain disruptions including in China. These higher costs crimping household budgets risk dampening consumer discretionary purchases. It remains to be seen how much this could negatively affect the job market in the months to come." Senior economist at Brean Capital Conrad DeQuadros said, "The record-high number of units that were authorized but not started, combined with the permits data, suggests that housing construction will continue to add to growth in the coming months, to the extent that builders can contend with supply constraints."
All Systems Ready for the Increase in the Interest Rates
The Federal Reserve increased its policy interest rates by a quarter of a percentage point. This was the first increase in the interest rates in more than two years. It also laid out a plan to increase the cost of borrowing by next year. The Federal Reserve noted that the war between Ukraine and Russia would also develop upward pressure on inflation and weigh heavily on the nation's economic activities. The Central Bank has shut its doors on its monetary policy that was present during the period of the pandemic. It has increased its fight against the very high inflation with the beginning of a series of hikes in the interest rates until the end of this year. But the overall urgency regarding the policy meeting of the Federal Reserve this week has increased further.
This is because inflation has still given no signs of easing. It may increase even more due to the war on Ukraine by Russia. This has led to an increase in the prices of oil this month. Chief economist at Grant Thornton Diane Swonk said that the Federal Reserve could not risk increasing the interest rates too fast. Evercore ISI analysts Peter Williams and Krishna Guha said that the message from the Federal Reserve should be that it is keeping a close watch on the inflation levels. They said that the volatile events of the past few weeks imply that the officials of the Central Bank will also want to place importance on the fact that no policy is fixed permanently.
Federal Reserve Chairman Jerome Powell said that the labor market was very tight. He made the remarks while speaking to lawmakers in Congress. But the chairman also said that the Federal Reserve was in unknown terrain. He said it was more like the high-inflation days nearly fifty years ago than the weak inflation environment present for the past thirty years. Diane Swonk said that the situation "couldn't be worse for the Federal Reserve, which is already chasing inflation for the first time since the 1980s. The disruptions we are seeing are adding fuel to a well-kindled inflation fire. Powell will be walking a tightrope, balancing the need to raise rates and rein in a more systemic rise in inflation with the need to avert a meltdown."
Powell said it was "more likely than not that we can achieve what we call a soft landing ... which is get inflation back under control without a recession. We haven't faced this challenge in a long time. But we all know the history, and we all know what we need to do. We think this labor market can handle, as I mentioned, tighter monetary policy, and the overall economy can as well. If you look at today's labor market, what you have is 1.7+ job openings for every unemployed person. So that is a very, very tight labor market — tight to an unhealthy level. We're hearing from companies that they can't hire enough people. They're having a hard time hiring. Across the economy, we'd like to slow demand to better align with supply. That over time should bring inflation down."
The numbers of weekly jobless claims have signaled a recovery for the economy of the nation. Further, the increase in the interest rates by the Federal Reserve is going to control the raging inflation that has increased against the backdrop of the war. The oil prices have become a little steady after going to record highs in the previous weeks.