Decline in US Weekly Jobless Claims; Apartment hunting below

  • Weekly jobless claims fall 20,000 to 192,000
  • Continuing claims down 29,000 to 1.684 million
  • Single-family housing starts up 1.1% in February
  • Import prices fall 0.1%; 1.1% less than in the previous year

WASHINGTON, March 16 (Reuters) – The number of Americans filing new jobless claims fell more-than-expected last week, indicating continued strength in the job market, even as the financial market turmoil casts a shadow over the economy.

Other data on Thursday also hit a fairly bullish note on the economy, with housing construction picking up sharply in February, driven by the rental housing market, and import prices posting their first year-on-year decline since December 2020. However, regional factories continued struggle in March.

“The sky isn’t falling for the real economy as the job market shows no fresh signs of layoffs and builders prepare the ground to start work on more apartment buildings,” said Chris Rupkey, chief economist at FWDBONDS in New York. “More rents mean less rent inflation, as some might think.”

Initial jobless claims fell by 20,000 to a seasonally adjusted 192,000 for the week ended March 11, the Labor Department said. Economists polled by Reuters had forecast 205,000 applications last week.

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Unadjusted claims fell by 21,396 to 217,444 last week. Applications in New York fell 15,305, reversing the previous week’s jump, which had been attributed to a mid-winter school break.

There were notable declines in enrollments in California, Georgia, Oregon, and Minnesota. In Indiana and Ohio, the demands increased significantly.

Despite job cuts at big tech companies, the job market has remained resilient as employers are generally reluctant to lay off workers after struggling to find workers during the COVID-19 pandemic.

Tight jobs, highlighted by data showing 1.9 job vacancies for every unemployed person in January, and stubbornly high inflation have strengthened the case for the Federal Reserve to hike interest rates further next week.

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

According to CME Group’s FedWatch tool, financial markets oscillated between a scenario in which the Fed hikes rates by a quarter of a point and one in which it halts its monetary tightening campaign at the March 21-22 monetary policy meeting.

Just last week they were betting on a 50 basis point rate hike. Those expectations were trimmed back to 25 basis points after the government reported the economy added 311k jobs in February, but wage growth slowed and the unemployment rate rose two-tenths of a percentage point to 3.6%.

On Thursday, a rate hike of 25 basis points was expected next week. The US Federal Reserve has raised its benchmark federal funds rate by 450 basis points from near zero to the current range of 4.50% to 4.75% since last March.

The claims report also showed that the number of people receiving benefits after an initial week of aid, a stand-in for recruitment, fell by 29,000 to 1.684 million in the week ended March 4. So-called continued applications remain low, suggesting some workers who have been made redundant could easily find new work.

However, market volatility has led some economists to expect an easing in labor market conditions as companies become more cautious and reassess their hiring and expansion plans.

“Any worker who experiences a job loss in the coming months will be more likely to need UI (unemployment insurance) benefits than those who have faced recent layoffs but have so far had the benefit of companies’ still insatiable appetite for hiring” , he said to Stuart Hoffman, senior economic adviser at PNC Financial in Pittsburgh, Pennsylvania.

US stocks were mixed as concerns about a global banking crisis continued. The dollar fell against a basket of currencies. US Treasury bond prices rose.


A Commerce Department report showed that single-family home construction and future building permits rebounded in February, raising hopes that the housing market may be stabilizing after higher mortgage rates.

Single-family housing starts, which account for the bulk of residential construction, rose 1.1% last month to a seasonally adjusted annualized rate of 830,000 units. They increased in the Northeast and West but plummeted in the densely populated South and Midwest. Single-family home construction fell 31.6% year-on-year in February.

The housing market has been smothered by the Fed’s most aggressive rate-hike cycle since the 1980s in an attempt to tame inflation. But the worst of the housing market downturn may be over. A poll Wednesday showed the National Association of Home Builders/Wells Fargo housing market index rose for the third straight month in March, although homebuilder sentiment remains subdued.

Mortgage rates, which had resumed their upward trend, may start falling as US Treasury yields have fallen sharply amid the recent banking turmoil. Some economists believe the instability in financial markets could make it more difficult for the Fed to raise interest rates further next week.

Housing starts for five-unit projects shot up 24.1% to 608,000 units, the highest since last April. The construction of apartment buildings will continue to be supported by the demand for rental apartments.

As construction of both single and multi-family homes picks up, overall housing starts rose 9.8% to a rate of 1.450 million units last month, the highest since September.

Economists had forecast February launches to rise to a rate of 1.310 million units. Launches fell 18.4% year over year in February.

Building permits for single-family homes increased by 7.6% to 777,000 units. They had lost weight for 11 months in a row.

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

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

But non-fuel import prices rose solidly, suggesting the fight against inflation is far from over.

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

Our standards: The Thomson Reuters Trust Principles.

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