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Claims for unemployment benefits in the US fall to the lowest level since 1969

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By Lucia Mutikani

WASHINGTON, March 24 (Reuters) – The number of Americans filing new claims for jobless benefits fell to a 52-1/2-year low last week and jobless numbers will continue to decline, pointing to a rapid decline in the slack in the labor market that will continue to drive wage inflation.

The strength in the labor market reported by the Labor Department on Thursday could push the Federal Reserve to raise interest rates by half a percentage point at its next policy meeting in May.

Fed Chairman Jerome Powell said on Monday that the central bank must “move fast” in the rate-hike cycle and possibly “more aggressively” to prevent elevated inflation from taking hold.

Last week, the central bank raised its key interest rate by 25 basis points, the first hike in more than three years.

“Business America isn’t laying off workers because they know the enormous challenges they face in filling open positions,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

“If initial claims stay below 200,000 for a period of time, it will raise a red flag for the Federal Reserve.”

Initial claims for state unemployment benefits fell 28,000 to a seasonally adjusted figure of 187,000 for the week ending March 19, the lowest level since September 1969. Economists polled by Reuters had forecast an average of 212,000 claims for the latest week.

Orders have fallen in part as COVID-19 restrictions were lifted across the country amid a massive drop in coronavirus cases. Subsidy claims have eased from an all-time high of 6.149 million reported in early April 2020.

There is no sign that Russia’s war against Ukraine, which has pushed US gasoline prices to record highs, has impacted the job market.

But bottle cellos in supply are restricting business spending on equipment. A separate report from the Commerce Department showed on Thursday that orders for non-defense capital goods – excluding aircraft – fell 0.3% last month after rising 1.3% in January.

Economists had forecast core capital goods orders, a measure closely watched by the Fed, to rise 0.5%.

Shipments of core capital goods will increase 0.5% on the monthly after rising 2.1% in January. The underlying capital goods shipments are used to calculate equipment spending in the Gross Domestic Product reading. Economists still expect strong business investment in equipment this quarter.

“February declines may represent a change in companies’ intentions for capital spending, but the February numbers may also reflect noise on monthly data,” said Daniel Silver, an economist at JPMorgan in New York.

“We believe real equipment spending is on track for strong growth in the first quarter, with even related price increases offsetting some of the nominal gains,” it stated.


Companies are desperate for workers. There were 11.3 million job vacancies at the end of January, with a record 1.8 job vacancies per unemployed person.

This mismatch between labor demand and supply is fueling wage growth, providing some cushion to households from rising gasoline prices, as well as fueling inflation.

The subsidy claims report also showed that the number of people receiving benefits after an initial week of aid rose to 1.35 billion from 67 billion for the week ending March 12, the lowest level since January 1970.

“These data suggest that the March jobs report is likely to be similar to recent reports, which have shown strong job growth and continued declines in the unemployment rate,” said Conrad DeQuadros, senior economic adviser at Brean Capital. In New York.

(Reporting by Lucía Mutikani. Edited in Spanish by Marion Giraldo)

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