The number of Americans filing new claims for unemployment benefits rose moderately last week, showing no signs yet that tightening credit conditions were having a material impact on the labor market, which remains tight.
Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 198,000 for the week ended March 25, the Labor Department said on Thursday. Economists polled by Reuters had forecast 196,000 claims for the latest week.
Claims have remained very low, bouncing around in a tight range despite high-profile layoffs in the technology industry.
Economists attributed some of the low level in claims to seasonal adjustment factors, the model that the government uses to strip out seasonal fluctuations from the data, which they said could have been affected by the COVID-19 pandemic.
They, however, acknowledged that claims were still low even using alternative methods.
“While alternative seasonal adjustment approaches may suggest less upbeat figures as of late, they do not suggest particularly weak results, although momentum may be softening,” said Daniel Silver, an economist at JPMorgan.
The Labor Department said updated seasonal adjustment factors would be available next month.
With 1.9 job openings for every unemployed person in January, employers have generally been reluctant to let go of workers, and laid off workers could be easily getting new employment. But tightening lending standards following the recent collapse of two regional banks could make it harder for households and small businesses to access credit, potentially dampening demand for labor.
According to an analysis by Goldman Sachs, leisure and hospitality and other service industries relied heavily on bank lending. Lack of access to credit could also worsen the current tough environment for the information sector.
“Over the last six months, these two industries account for half of the plus 150,000 average overshoot in nonfarm payroll growth relative to its pre-pandemic average pace,” Goldman Sachs economist Spencer Hill said in a note. “We expect slowing job growth in this sector as diminished loan availability dissuades restaurant operators and other smaller businesses from hiring new workers and opening new establishments.”
The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 4,000 to 1.689 million during the week ending March 18. The so-called continuing claims covered the period during which the government surveyed households for the unemployment rate for March.
Continuing claims increased moderately between the February and March survey weeks. The unemployment rate was at 3.6% in February.
Labor market resilience is helping to keeping a recession at bay. In a second report on Thursday, the Commerce Department confirmed that the economy grew at a solid clip in the fourth quarter, though much of the increase in output came from inventory accumulation, mostly unplanned.
Gross domestic product increased at a revised 2.6% annualized rate last quarter, the government said in its third estimate of fourth-quarter GDP. That was revised down from the 2.7% pace reported last month. Economists had expected GDP growth would be unrevised. Growth estimates for the first quarter are currently as high as a 3.2% rate.