The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, further signaling the ever-tightening labor market conditions.
Initial claims for state jobless benefits fell 3,000 to a seasonally adjusted 192,000 for the week ended Feb. 18, the Labor Department reported on Thursday. Economists polled by Reuters had forecast 200,000 claims for the latest week. Claims have played in the 183,000-206,000 range this year.
Economists have long argued that the massive job cuts by Twitter, Microsoft, Amazon.com and Meta, the parent of Facebook, which are hiring redundant workers during the pandemic, are not representative of the economy as a whole.
That view is also shared by policy makers. The minutes of the Federal Reserve's January 31st and February 1st policy meetings published on Wednesday showed that "some policymakers noted that the recent reductions in the workforce of some large technology businesses followed larger increases over the previous several years and assessed that these reductions did not appear . to reflect the widespread weakness in labor demand.”
U.S. central bank has raised its policy rate by 450 basis points since last March from near zero to a range of 4.50%-4.75%, with most of the increase between May and December. While two additional rate hikes of 25 basis points are expected in March and May, financial markets are betting on another hike in June due to sustained labor market strength.
Economists expect strong job growth in February, although the pace may slow from last month's impressive 517,000 jobs. Strong wage growth generated by a tight labor market is helping to support consumer spending and the overall economy.
A separate report from the Commerce Department on Thursday confirmed that the economy grew strongly in the fourth quarter, although much of the increase in output came from unsold goods at businesses.
Gross domestic product rose at a revised annual rate of 2.7% last quarter, the government reported in its second estimate of fourth-quarter GDP. It was revised down from the 2.9% rate reported last month.
Retail sales growth also picked up in January and output at factories recovered as did activity in the service industry. The housing market slump appears to be nearing bottom, with pre-owned home sales falling modestly last month. However, monthly inflation increased in January.
