The number of new applications for unemployment benefits fell by 5,000 last week to 166,000, tying the lowest level for initial claims since 1968.
The extremely low level of weekly jobless claims, reported Thursday by the Department of Labor, indicates that layoffs are rare as employers are increasingly desperate to hold on to workers. Last week’s decline continues a generally downward trend in jobless claims since the omicron variant peaked in mid-January and will lend urgency to the Federal Reserve‘s plans to raise its interest rate target. Revised numbers in Thursday’s release showed that claims also hit the 166,000 mark in March.
The general trend of declining layoffs is good economic news for President Joe Biden, who has faced declining approval ratings and displeasure with how his administration has handled rapidly rising inflation.
It also gives the Federal Reserve, which just raised interest rates for the first time in years, increased confidence in its plans to tighten monetary policy and jack up interest rates. Most investors expect the central bank to hike rates more aggressively than initially expected at next month’s meeting.
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“That claims remain so low at a time of such turmoil suggests that, for now at least, the economy is holding up in the face of soaring crude oil, gasoline, and other prices. How long this can persist remains to be seen,” said Mark Hamrick, Bankrate’s senior economic analyst.
New jobless claims have been in retreat over the past year. Around this time in March of last year, new claims were averaging more than 700,000 per week.
In other positive economic news, the economy added 431,000 jobs in March, and unemployment fell to pre-pandemic rates, signaling that the labor market is hot.
Other details of the employment report from the Bureau of Labor Statistics showed strong underlying growth — especially the unemployment rate dipping down to 3.6%, the lowest since February 2020, the last month before pandemic-related lockdowns began.
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Labor force participation also surged in March. For workers in their prime working years, that is, ages 25 to 64, the overall employment rate is now just a half-percentage point from where it was prior to the pandemic.
