WASHINGTON: The number of Americans filing new claims for unemployment benefits fell more than expected last week, while layoffs declined sharply in February, indicating that the labor market recovery was gaining steam.
Initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 215,000 for the week ended Feb. 26, the Labor Department said on Thursday. Economists polled by Reuters had forecast 225,000 applications for the latest week.
It was the second straight weekly decline in claims. With a near record 10.9 million job openings at the end of December, companies are holding on to their workers.
Claims could soon fall back below 200,000. They were last below this level in early December.
Claims have dropped from a record high of 6.149 million in early April 2020. Tight labor market conditions are fueling wage growth, which is adding to inflation pressures.
Federal Reserve Chair Jerome Powell told lawmakers on Wednesday that "the labor market is extremely tight." Powell said he would support a 25-basis-point interest rate hike at the US central bank's March 15-16 policy meeting and would be "prepared to move more aggressively" if inflation does not abate as fast as expected.
Though Russia's war against Ukraine poses a risk to the labor market through disruptions of supply chains, economists expect the labor market will recoup all the jobs lost during the COVID-19 pandemic this year. Prices of oil, wheat and other commodities have soared, which will further stoke inflation.
US weekly jobless claims fall; fourth-quarter GDP growth revised slightly up
A separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showed U.S.-based employers announced 15,245 job cuts in February, down 20% from January. Layoffs dropped 56% compared to a year ago.
Companies also announced plans to hire 215,127 workers last month, the largest February total since Challenger began tracking monthly hiring figures in 2002. That compared to the 77,630 jobs announced in January.
"The latest numbers give more evidence that job creation is strong, and employers continue to hold fast to their workforces," said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. "The churn in the labor market is coming from resignations."
The increase in planned hiring was led by retailers, with 114,118 jobs announced. Companies in the entertainment/leisure industry planned to add 22,369 jobs to payrolls. The government sector announced plans to hire 17,266 workers. Employers in the automotive industries planned to increase employment by 14,486.
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