US weekly jobless claims rise; layoffs fall in February

The number of Americans filing for unemployment benefits last week rebounded from a near 44-year low, but the labour market continues to tighten amid a sharp drop in job cuts in February. Initial claims for state unemployment benefits rose 20,000 to a seasonally adjusted 243,000 for the week ended March 4, the Labour Department said on Thursday. Claims for the prior week were unrevised at 223,000, the lowest level since March 1973.
"There is no evidence of a pickup in involuntary employment separations. We view this as evidence of a tight labour market," said John Ryding, chief economist at RDQ Economics in New York. Jobless claims have now been below the 300,000 threshold associated with a healthy labour market for 105 straight weeks. That is the longest stretch since 1970, when the labour market was much smaller. The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, rose 2,250 to 236,500 last week.
A separate report from global outplacement firm Challenger, Gray & Christmas showed US-based employers announced 36,957 job cuts in February, down 19 percent from January. Layoffs tumbled 40 percent compared to February last year. The labour market is at or close to full employment, with employers increasingly reporting difficulties finding qualified workers for open job positions.
The sustained strength in the jobs market is likely to be corroborated on Friday with the release of the government's closely watched employment report for February. According to a Reuters survey of economists, nonfarm payrolls probably gained 190,000 jobs last month after surging 227,000 in January. But payrolls could surprise on the upside after a report on Wednesday showed private sector employers hired 298,000 workers in February, the largest amount in a year.
The unemployment rate is forecast falling one-tenth of a percentage point to 4.7 percent. Labour market tightness together with firming inflation could allow the Federal Reserve to raise interest rates as early as next week. Fed Chair Janet Yellen signalled last week that the US central bank would likely raise rates at its March 14-15 policy meeting. The Fed raised its benchmark overnight rate in December and has forecast three rate increases for 2017.
The labour market strength comes despite the economy showing signs of fatigue early in the first quarter. Data on trade, consumer, business and construction spending were soft in January, leaving the Atlanta Fed forecasting GDP increasing at a 1.2 percent rate in the first quarter.
The economy grew at a 1.9 percent annualized rate in the fourth quarter, slowing from the third quarter's brisk 3.5 percent pace. In another report on Thursday, the Labor Department said import prices rose 0.2 percent last month after advancing 0.6 percent in January. It was the third straight monthly increase. In the 12 months through February, import prices accelerated 4.6 percent, the largest gain since February 2012, after rising 3.8 percent in January.
Import prices excluding fuels rose 0.3 percent, the first increase since July, suggesting the drag on prices from a stronger dollar was fading. That could result in a broader increase in imported inflation. Import prices excluding fuels slipped 0.1 percent in January.