US weekly jobless claims fall; looking for accommodation downstairs

WASHINGTON, March 16 (Reuters) – The number of Americans filing new claims for unemployment benefits fell more than expected last week, indicating continued strength in the labor market, although turmoil in financial markets is throwing a shadow over the economy.

Other data on Thursday also gave the economy a fairly upbeat note, with home construction surging in February, driven by the rental housing market, and import prices registering their first decline in a year. on the other since December 2020. However, regional factories continued to struggle in March.

“The sky is not falling for the real economy as the labor market shows no new signs of layoffs and builders are setting the stage to start work on more multifamily housing,” said Chris Rupkey, chief economist at FWDBONDS. At New York. “More rent means less rent inflation, some might think.”

Initial claims for state unemployment benefits fell by 20,000 to a seasonally adjusted 192,000 for the week ended March 11, the Labor Department said. Economists polled by Reuters had forecast 205,000 claims for the past week.

Unadjusted claims fell from 21,396 to 217,444 last week. Claims in New York fell by 15,305, reversing the previous week’s jump, which had been attributed to a mid-winter school break.

There were notable declines in filings in California, Georgia, Oregon and Minnesota. Claims increased significantly in Indiana and Ohio.

Despite job cuts by big tech companies, the labor market has remained resilient, with employers generally reluctant to lay off workers after struggling to find workers during the COVID-19 pandemic .

Labor market tightness, highlighted by data showing 1.9 jobs created for every jobless person in January, and stubbornly high inflation have bolstered the case for the Federal Reserve to continue raising interest rates. interest next week.

But the recent collapse of two regional banks has sparked fears of contagion in the banking sector, hurting the stock market and prompting economists to revise down their GDP growth estimates for this year.

Financial markets have oscillated between a scenario in which the Fed raises rates by a quarter of a percentage point and a scenario in which it suspends its monetary policy tightening campaign at the March 21-22 policy meeting, according to CME Group’s FedWatch tool.

As recently as last week, they were betting on a 50 basis point rate hike. Those expectations were cut to 25 basis points after the government announced the economy added 311,000 jobs in February, but wage gains slowed and the jobless rate rose two-tenths of a percentage point to 3.6%.

On Thursday, we expected a rate hike of 25 basis points next week. The U.S. central bank has raised its benchmark overnight interest rate by 450 basis points since last March, taking it from near zero to the current range of 4.50% to 4.75% .

The claims report also showed the number of people receiving benefits after a first week of help, a proxy indicator of employment, fell by 29,000 to 1.684 million in the week ending March 4. . So-called continuing claims remain low, suggesting some laid-off workers could easily find new work.

But market volatility has led some economists to expect labor market conditions to ease as companies become more cautious and reassess their hiring and expansion plans.

“Any workers who experience job loss in the coming months will be more likely to need unemployment insurance benefits than those who have recently faced layoffs but have so far benefited from the insatiable corporate appetite for hiring,” said Stuart Hoffman, senior economic adviser at PNC Financial in Pittsburgh, Pennsylvania.

US stocks were mixed as concerns over a global banking crisis lingered. The dollar depreciated against a basket of currencies. US Treasury prices rose.

Housing starts rebound

A Commerce Department report showed single-family home construction and future building permits rebounded in February, raising hopes the housing market was stabilizing after being hammered by higher mortgage rates.

Single-family housing starts, which account for the bulk of residential construction, rose 1.1% to a seasonally adjusted annual rate of 830,000 units last month. They increased in the northeast and west, but fell in the densely populated south as well as in the Midwest. Construction of single-family homes fell 31.6% year-on-year in February.

The housing market has been stifled by the Fed’s most aggressive cycle of raising interest rates since the 1980s to rein in inflation. But the worst of the housing market downturn may be over. A survey on Wednesday showed the National Association of Home Builders/Wells Fargo housing market index rose for a third straight month in March, although homebuilder sentiment remains depressed.

Mortgage rates, which had resumed their upward trend, may begin to decline as US Treasury yields have fallen sharply amid the recent banking turmoil. Some economists believe the instability in financial markets could make it harder for the Fed to keep raising rates next week.

Housing starts for projects of five or more units jumped 24.1 per cent to reach 608,000 units, the highest level since last April. Construction of multi-family dwellings continues to be supported by demand for rental housing.

With the rise in construction of single-family and multi-family homes, overall housing starts jumped 9.8% to a rate of 1.450 million units last month, the highest level since September.

Economists had forecast housing starts to rise at a rate of 1.310 million units in February. Housing starts fell 18.4% year-on-year in February.

Single-family building permits rose 7.6% to 777,000 units. They had declined for 11 consecutive months.

Permits for housing projects of five or more units jumped 24.3% to 700,000 units. In total, building permits jumped 13.8% to a rate of 1.524 million units.

Another Labor Department report showed import prices fell 0.1% last month after falling 0.4% in January. In the 12 months to February, import prices fell 1.1%. This is the first drop since December 2020.

But non-fuel import prices rose sharply, indicating that the fight against inflation is far from over.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao

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