WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits fell to a nearly half-century low last week, pointing to sustained labor market strength despite slowing economic growth.
FILE PHOTO – People attend the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan/File Photo
But the loss of momentum in activity has left some employers unsettled about the economy’s outlook. Announced job cuts by U.S.-based companies in the first quarter were the highest since 2015, other data showed on Thursday.
Fading stimulus from a $1.5 trillion tax cut package, the United States’ trade war with China, slowing global growth and uncertainty over Britain’s exit from the European Union are casting a shadow over the economy, which in July will celebrate the longest expansion on record.
“We are at a point of inflection where the overall economic trend is changing,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “That would account for at least some of the volatility and contradictory nature of the data. It would also point to a slowdown not a crash.”
Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 202,000 for the week ended March 30, the lowest level since early December 1969, the Labor Department said. Economists polled by Reuters had forecast claims rising to 216,000 in the latest week. The Labor Department said only claims for California were estimated.
The claims data have shown no significant pickup in layoffs and there have been reports of companies reluctant to let go of workers amid a growing shortage of skilled labor. The scarcity of workers contributed to a recent slowdown in hiring.
Job growth has slowed from last year’s roughly 223,000 average monthly pace. The pace of increase, however, remains more than sufficient to keep up with growth in the working age population, holding down the unemployment rate.
The dollar gained versus a basket of currencies. U.S. Treasuries prices rose, while stocks on Wall Street were mixed.
JOB GROWTH REBOUND
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,000 to 213,500 last week, the lowest level since early October 2018.
While the claims data has no bearing on March’s employment report, which is scheduled for release on Friday, economists said it bodes well for an anticipated rebound in job growth.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 180,000 jobs last month after a meager 20,000 in February, which was also seen as pay-back after robust gains in the prior two months. The unemployment rate is forecast unchanged at 3.8 percent.
“We see the initial claims data as consistent with healthy labor market conditions and in line with the widely anticipated rebound in the pace of payroll employment in March,” said Jonathan Millar, an economist at Barclays in New York.
A separate report on Thursday from global outplacement consultancy Challenger, Gray & Christmas showed planned job cuts by U.S.-based employers dropped 21 percent to 60,587 in March.
However, announced layoffs in the first quarter jumped 10.3 percent to 190,410 from the last three months of 2018. That was the highest since the third quarter of 2015 and was partly blamed on “economic uncertainty and fears of an upcoming downturn.”
Retailers continued to lead job cuts, purging 46,061 positions in the first quarter. The automotive sector eliminated 8,838 jobs in March, leading to 15,887 layoffs by auto manufacturers and suppliers in the first quarter. Redundancies were also high in the energy and financial sectors.
“Companies are reacting to market conditions as much as consumer demand,” said Andrew Challenger, vice president at Challenger, Gray & Christmas.
Reporting by Lucia Mutikani; Editing by Andrea Ricci