The number of Americans filing new claims for unemployment fell again last week, pointing to sustained labor market strength and adding to financial market fears that the Federal Reserve could keep hiking interest rates for longer.
Those worries were further heightened by another report from the Labor Department on Thursday showing labor costs grew much faster than previously estimated in the fourth quarter. The labor market remains tight despite rising risks of a recession, contributing to keeping inflation elevated via solid wage gains.
“The labor market shows no fresh signs of deterioration with minimal job layoffs despite the news of big tech firings the last several months, and this will harden the resolve of Fed officials to slow economic demand down with higher interest rates,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 190,000 for the week ended Feb. 25, the Labor Department said. It was the seventh straight week that claims remained below 200,000. Economists polled by Reuters had forecast 195,000 claims for the latest week.
Unadjusted claims dropped 9,297 to 201,710 last week. The decline was led by California and Kentucky. There were notable decreases in claims in Michigan, Ohio and Texas. Big increases in claims were reported in Massachusetts and Rhode Island.
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