WASHINGTON: The number of Americans filing new applications for unemployment benefits fell last week, pointing to continued labour market stability ahead of potential volatility from import tariffs.
Initial claims for state unemployment benefits dropped 6,000 to a seasonally adjusted 219,000 for the week ended March 29, the Labor Department said on Thursday. Economists polled by Reuters had forecast 225,000 claims for the latest week.
Low layoffs have kept the labor market humming. There were 1.07 job openings for every unemployed person in February, down from 1.13 in January, the government reported on Tuesday.
But economists worry that President Donald Trump’s blizzard of tariffs since returning to the White House in January could hurt the labor market.
Business and consumer sentiment have plummeted, which could weigh on investment, spending and demand for workers. Trump said on Wednesday he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of the country’s biggest trading partners. Fitch Ratings that estimated the new tariffs were the highest in more than a century.
Trump sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base, a view not shared by economists.
Deep spending cuts being implemented by the Trump administration, which have seen mass firings of federal government workers, also pose downside risk to the labour market.
The mass firings are yet to significantly show in a subset of the claims report amid ongoing legal battles.
But global outplacement firm Challenger, Gray & Christmas said on Thursday that it had over the past two months tracked 280,253 planned layoffs of federal workers and contractors impacting 27 agencies. It said more than half of the 497,052 layoffs announced in the first quarter were in Washington D.C.
While overall layoffs have remained historically low, hiring has been tepid, resulting in those who lose their jobs experiencing long spells of unemployment. The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 56,000 to a seasonally adjusted 1.903 million during the week ending March 22, the claims report showed.
The claims data have no bearing on the closely watched employment report for March as they fall outside the survey period. Nonfarm payrolls likely increased by 135,000 jobs in the last month after rising 151,000 in February, a Reuters survey predicted. The unemployment rate is forecast unchanged at 4.1%. – Reuters
