The number of Americans filing new applications for jobless benefits increased slightly last week and the unemployment rate appeared to hold steady in February amid a stable labor market.
The weekly jobless claims report from the Labor Department on Thursday suggested the labor market remained in a “low-hire, low-fire” state, and supported economists’ expectations that the Federal Reserve would not cut interest rates before Fed Chair Jerome Powell’s term ends in May.Â
The labor market is regaining its footing after hitting a soft patch last year amid uncertainty economists attributed to President Donald Trump’s broad tariffs.
“The data show no sign of the layoffs we would expect in a weakening labor market during the early days of a hypothetical recession,” said Carl Weinberg, chief economist at High Frequency Economics. “That will jolly up traders who believe the Fed will not cut rates anytime soon, given a steady labor market and inflation above target.”
Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 212,000 for the week ended February 21. Economists polled by Reuters had forecast 215,000 claims for the latest week. Last week’s claims included the Presidents’ Day holiday, which could have impacted the data.Â
Still, claims were below the levels seen during the same period last year. The U.S. Supreme Court last Friday struck down the tariffs, which Trump pursued under a law meant for use in national emergencies. Trump swiftly imposed a 10% global tariff for 150 days to replace some of the emergency duties, before raising the rate to 15% over the weekend.
Economists said the latest moves created near-term uncertainty, but anticipated minimal economic impact.Â
Lingering uncertainty from the since-invalidated import duties was blamed for a general hesitancy among businesses to increase hiring. A rapid adoption of artificial intelligence is adding another layer of caution, economists said. AI is the leading cause of layoffs in the technology sector.
Stocks on Wall Street fell amid wariness over the implications of AI. The dollar advanced against a basket of currencies. U.S. Treasury yields were lower.
Low Hiring is the Most Worrying Aspect
“The low hiring rate is still the most concerning aspect of the labor market, but the trend in continued claims suggests employers aren’t pulling back further,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, dropped 31,000 to a seasonally adjusted 1.833 million during the week ended February 14, the claims report showed. The so-called continuing claims covered the period during which the government surveyed households for February’s unemployment rate.Â
Continued claims rose modestly between the January and February survey weeks. The jobless rate eased to 4.3% in January from 4.4% in December. The Chicago Fed forecast the unemployment rate steady at 4.28% in February, which would round up to 4.3%.
While the labor market is stabilizing, consumers remain anxious about their employment prospects.Â
A survey from the Conference Board this week showed the share of consumers who viewed jobs as “hard to get” increased to a five-year high in February, though households also believed the availability of jobs had improved.
The median duration of unemployment is near four-year highs, and jobs remain scarce for young college graduates, labor market data shows. Unemployed recent college graduates do not show in the claims data because they have limited or no work history, making them ineligible to file for jobless benefits.
“The relationship between continuing claims and unemployment is far from airtight, given that the long-term unemployed, new entrants to the labor market, and those re-entering from inactivity, all are ineligible to claim,” said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.Â
Allen added that the Conference Board survey’s “hard to get” jobs measure was “a very reliable indicator in the past,” and pointed “to the unemployment rate rising again soon.”
Continuing claims could be falling because some people have exhausted their eligibility, limited to 26 weeks in most states.
Andrew Stettner, senior director for economic security at the National Employment Law Project, said a town hall for technology workers this past Sunday captured the AI anxiety.
“Software engineers talked about being laid off and out of work for 12 months or more,” said Stettner, a former director of unemployment insurance modernization at the Labor Department.
“They saw AI as just the latest accelerant of rounds of technology layoffs at major companies like Amazon, but more importantly a rising threat for engineers to find any new job.”
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)
