US weekly jobless claims fall; housing find bottom

  • Weekly jobless claims fall by 20,000 to 192,000
  • Continuing claims decrease by 29,000 to 1.684 million
  • Single-family homes start to rise 1.1% in February
  • Import prices fall by 0.1%; down 1.1% year-on-year

WASHINGTON, March 16 (Reuters) – The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to a continued strong labor market, as the turmoil in financial markets casts a shadow over the economy.

Other data on Thursday also provided a fairly optimistic note on the economy, with housing construction rising in February, driven by the rental housing market, and import prices falling year-on-year for the first time since December 2020. Regional factories continued to grow, however, struggled in March.

“The sky is not falling on the real economy as the job market shows no new signs of layoffs and builders prepare the ground to begin work on more multifamily homes,” said Chris Rupkey, chief economist at FWDBONDS in New York. “More rent means less rental inflation, some may think.”

Initial claims for state unemployment benefits fell by 20,000 to a seasonally adjusted 192,000 for the week ending March 11, the Department of Labor said. Economists polled by Reuters had forecast 205,000 claims for the past week.

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Unadjusted claims fell 21,396 to 217,444 last week. The number of claims in New York fell to 15,305, reversing the previous week’s increase attributed to a mid-winter school break.

There were notable drops in filings in California, Georgia, Oregon and Minnesota. Claims rose significantly in Indiana and Ohio.

Despite job cuts by major tech companies, the job market has remained resilient, with employers generally reluctant to lay off workers after struggling to find work during the COVID-19 pandemic.

The tight labor market, highlighted by data showing 1.9 job openings for every unemployed person in January, and stubbornly high inflation prompted the Federal Reserve to continue raising interest rates next week.

But the recent collapse of two regional banks has sparked contagion fears in the banking sector, bruising the stock market and prompting economists to cut their GDP growth estimates for this year.

According to the CME Group’s FedWatch tool, financial markets have wavered between a scenario in which the Fed raises rates by a quarter of a percentage point and one in which monetary policy tightening is interrupted during the March 21-22 policy meeting.

Last week they were still betting on a rate hike of 50 basis points. Those expectations were pushed back to 25 basis points after the government reported that the economy added 311,000 jobs in February, but wage increases slowed and the unemployment rate rose by two-tenths of a percentage point to 3.6%.

The expectation on Thursday was a rate hike of 25 basis points next week. The US Federal Reserve has raised its overnight interest rate by 450 basis points since last March from near zero to the current range of 4.50%-4.75%.

The claims report also showed that the number of people receiving benefits after an initial week of aid, a proxy for hiring, fell by 29,000 to 1.684 million in the week ending March 4. So-called ongoing claims remain low, suggesting that some laid-off workers could easily find new employment.

But market volatility has led some economists to expect an easing of labor market conditions as companies become more cautious and rethink their hiring and expansion plans.

“Employees who lose their jobs in the coming months are more likely to need UI benefits (unemployment insurance) than those who have recently faced layoffs but have taken advantage of companies’ still insatiable appetites to date,” he said. Stuart Hoffman, senior economic adviser at PNC Financial in Pittsburgh, Pennsylvania.

US equities were mixed as concerns about a global banking crisis persisted. The dollar dipped against a basket of currencies. US Treasury bond prices rose.


A report from the Department of Commerce showed that single-family home construction and permits for future construction recovered in February, offering hope that the housing market is stabilizing after being hammered by higher mortgage rates.

Starts of single-family homes, which account for the bulk of residential construction, rose 1.1% last month to a seasonally adjusted annual rate of 830,000 units. They increased in the Northeast and West, but declined in both the densely populated South and Midwest. Construction of single-family homes fell 31.6% year-on-year in February.

The housing market has been stifled by the Fed’s most aggressive rate hike cycle since the 1980s to curb inflation. But the worst of the housing recession may be over. A survey on Wednesday found that the National Association of Home Builders/Wells Fargo Housing Market Index rose for a third consecutive month in March, though sentiment among homebuilders remains low.

Mortgage rates, which had resumed their upward trend, may start to fall now that US Treasury yields have fallen sharply amid the recent banking turmoil. Some economists think financial market instability could make it more difficult for the Fed to raise rates next week.

Housing starts for projects with five units or more skyrocketed 24.1% to 608,000 units, the highest level since last April. The construction of multi-family housing continues to be supported by the demand for rental housing.

With construction of both single-family and multi-family homes rising, the total number of homes started rose 9.8% last month to 1.450 million units, the highest level since September.

Economists had predicted the February start would rise to 1.310 million units. Starts fell 18.4% year-on-year in February.

Building permits for single-family homes increased 7.6% to 777,000 units. They had refused for 11 consecutive months.

Permits for housing projects with five units or more jumped 24.3% to a rate of 700,000 units. Overall, building permits increased by 13.8% to a rate of 1.524 million units.

Another report from the Labor Department showed that import prices fell 0.1% last month after falling 0.4% in January. In the 12 months to February, import prices fell by 1.1%. That was the first drop since December 2020.

But non-fuel import prices rose sharply, indicating that the battle against inflation is far from over.

Reporting by Lucia Mutikani; Edited by Chizu Nomiyama and Paul Simao

Our Standards: The Thomson Reuters Principles of Trust.


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