New applications for unemployment benefits rose 21,000 to 231,000 to begin March, the Department of Labor reported Thursday in more good news for the economy.
Forecasters had expected jobless claims to tick up, after hitting the lowest mark in nearly 49 years the previous week.
But even with Thursday’s reported increase, claims are still very low by historical levels. On a monthly average, claims are running at the second-lowest rate in 44 years.
Low jobless claims are a good sign because they suggests that layoffs are rare. In recent weeks, they’ve been scraping historic lows, hinting that the labor market recovery still has momentum.
“The labor market could not be any better is what this rock bottom low level of unemployment claims means as companies are doing everything they can to keep the workers they have,” noted Chris Rupkey, chief financial economist for MUFG.
The continued good news regarding layoffs will raise expectations for Friday’s jobs report, which forecasters already reckoned would show over 200,000 new jobs for February.
Signs of a tight labor market, at this late stage of the recovery, will suggest to the Federal Reserve that it is justified in continuing to raise its interest rate target over the course of the year to try to prevent monetary policy from becoming too loose and driving up inflation.
On the other hand, though, continued strong job growth suggests that the recovery could still run further, and that unemployment could fall even further from its current low 4.1 percent rate without inflation rising beyond the Fed’s target.
For its part, the Trump administration has stated a goal of not just lowering the unemployment rate, but also generating wage increases and enticing people currently out of the labor market to rejoin the job search.
