US weekly jobless claims fall amid strong demand for workers

Initial claims for state unemployment benefits decreased 15,000 to a seasonally adjusted 214,000 for the week ended March 12, the Labor Department said on Thursday. Economists polled by Reuters had forecast 220,000 applications for the latest week.

Claims have dropped from a record high of 6.149 million in early April 2020. Russia’s three-week old war against Ukraine poses a risk to the labor market through disruptions of supply chains and higher gasoline prices. But economists are optimistic the labor market and economy will ride out the storm.

There were 11.3 million job openings at the end of January, with a record 1.8 open positions per unemployed person. This misalignment between demand for labor and supply is boosting wage growth, contributing to high inflation.

The Federal Reserve on Wednesday raised its policy interest rate by 25 basis points, the first hike in more than three years, and laid out an aggressive plan to push borrowing costs to restrictive levels by 2023.

Fed Chair Jerome Powell described the labor market as “extremely” tight, telling reporters that “we think this labor market can handle, as I mentioned, tighter monetary policy, and the overall economy can as well.”

Last week’s claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of March’s employment report. Claims fell considerably between the February and March survey periods.

The economy created 678,000 jobs in February. Employment growth has been aided by the return of some workers to the labor force amid a significant decline in Covid-19 infections.