Analysis - The Weekly Jobless Claims For March 19

Analysis - The Weekly Jobless Claims For March 19

By Yash

The number of citizens filing weekly jobless claims for the week ended March 19 declined to the lowest in more than a half-century. The initial weekly jobless claims declined by 28,000 to a modified figure of 187,000. This is the minimum mark since the start of the 1970s. The experts predicted that there would be more than two hundred applications for this week. The report also said that the continuing weekly jobless claims declined by 67,000 to 1.35 million for the week ended March 12. This was also the lowest level since the 1970s. The overall unemployment rate declined from a low of a couple of years to nearly four percent in February. The continuing jobless claims cover the data of the period in which the Federal Government surveyed the households of the nation for the unemployment rate for this month. The continuing claims fell down a lot between the survey periods of February and March.


Another report from the Commerce Department said that the orders for non-defense goods declined in February, the first decline in twelve months. It is a highly scrutinized proxy for corporate expenditure aims in the country. But the information for January was modified to a higher mark which showed that the core capital goods orders increased by more than a percent. The downward trend in the previous month shows that there had been a decline in the orders for electronic products, computers, fabricated metals, primary metals, and machinery. The shipments of the core capital goods also increased in the previous month. Its data for January was also modified to show that it had increased by more than two percent in that month. The core capital goods shipments are utilized to find out the portion of equipment spending in the overall gross domestic product of the nation. In the present financial quarter, the experts have predicted robust business investment in the equipment sector.


Senior economist at Moody's Analytics Ryan Sweet said, "US businesses are not laying off workers because they know the enormous challenges in filling open positions. If initial claims remain below 200,000 for a period of time, it will raise a red flag with the Fed." Economist at JPMorgan Daniel Silver said, "It is possible that the February declines represent a shift in businesses' intentions for Capex, but the February figures also may just reflect noise in the monthly data. We think real equipment spending is on track for strong growth in the first quarter even with related price increases offsetting some nominal gains." Senior economic advisor at Brean Capital Conrad DeQuadros said, "These data suggest that the March employment situation report is likely to be similar to recent reports, which have shown strong job growth and continuing declines in the unemployment rate."


The Weekly Jobless Claims Show the Unemployment Rolls are Decreasing


The unemployment rolls are continuing their downward journey. This shows that the quickly growing labor market will further decrease the inflation in wages. The strengthening of the labor market was released by the Labor Department. The weekly jobless claims numbers may lead the central bank to increase the interest rates by fifty basis points at the next policy meeting that will be held a couple of months from now. The Federal Reserve Chairman Jerome Powell said that the central bank has to move fast to increase the rates and more aggressively to keep the raging inflation at bay. The Federal Reserve has already increased the interest rates by a quarter of a percent. It was the first hike in interest rates since the start of the pandemic. The decline in the claims in the previous week was very high. There were big declines in Illinois, Kentucky, Michigan, and California.


The numbers have been decreasing swiftly partly because the coronavirus lockdowns across the nation have been removed. They have decreased from a high of more than six million two years ago. There are also no signs that the war between Ukraine and Russia is going to be resolved anytime soon. The war has led gas prices to a record high in the country. It is predicted to put a great strain on the international supply chain of gas and oil. The conflict has already impacted business activity and the labor market in the country. Another survey from S&P Global said that the flash US Composite PMI Output Index increased to more than half a year in February. The index tracks the services and manufacturing sectors. It was led by robust demand for both services and goods. Firms were quite upbeat about the overall outlook for this year. 


Federal Reserve Can Increase Interest Rates More Aggressively If Needed


The Federal Reserve Chairman Jerome Powell gave the strongest message till now regarding the raging inflation in the country a few days ago. He said that the Federal Reserve must move quickly to increase interest rates and prevent inflation from becoming a permanent feature of the economy. His message sent the financial markets into a tizzy to adjust themselves for a greater possibility of the Federal Reserve increasing the interest rates by fifty basis points at one of its remaining meetings this year. The chairman has already shown urgency to the inflation challenge before the central bank. This urgency was not visible in the previous week when the Federal Reserve went for its first hike in the interest rates since the start of the pandemic. The experts predicted that inflation would be at its highest level in this financial quarter and quieten down in the second half of this year.


Powell said at a National Association for Business Economics conference, "The labor market is very strong, and inflation is too high. There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level and then move to more restrictive levels if that is required to restore price stability. We will do so if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meeting. The risk is rising that an extended period of high inflation could push longer-term expectations uncomfortably higher. As we set policy, we will be looking to actual progress on these issues and not assuming significant near-term supply-side relief. That story has already fallen apart.”


“To the extent it continues to fall apart, my colleagues and I may well reach a conclusion that we'll need to move more quickly and if so, we'll do so. The economy is very strong and is well-positioned to handle tighter monetary policy." Kevin Flanagan, Head of fixed income strategy at WisdomTree Investments, said, "This is not just going to be a near-term tactical phenomenon. This is a more strategic type of messaging, I think, from the Fed." Chief global economist of Morgan Stanley, Seth Carpenter, said, "Powell was reasonably forthcoming that there's uncertainty. If you keep going until you see the outcome that you desire, chances are you've gone too far."




The weekly jobless claims are showing a downward trend. But the service organizations were quite worried about the outcome of the rising cost of living due to the war between Ukraine and Russia. The shares on Wall Street got back from a major decline. The dollar also increased against a basket of currencies. The costs of US treasuries declined. The layoffs are going to stay quite low for some time to come because of a huge shortage of workers. There were more than eleven million job openings at the start of February. There were a record number of open positions per unemployed individual. This gap between the supply and the demand for labor increases the wage. It gives the households some cushion against the increasing gas prices and feeding into the overall high inflation. There are more individuals who can rejoin work in March because coronavirus infections are continuously decreasing. This can cause a good boost in the growth in the payrolls.