With unemployment benefit numbers at a 52-year low and manufacturers humming, the U.S. economy is flexing its muscles.
Americans who applied for unemployment benefits decreased last week, indicating that the economy is on track for another month of good employment increases.
According to the Labor Department’s weekly jobless claims report released on Thursday, the number of people receiving unemployment benefits was the lowest it had been in 52 years at the beginning of March.
Despite rising prices and geopolitical uncertainties, the economy’s underlying strength was clear in other statistics indicating an increase in manufacturing production and a dramatic return to homebuilding.
For the first time in more than three and a half years, the Federal Reserve raised its policy interest rate by 25 basis points on Wednesday. It also puts out an aggressive goal of bringing borrowing prices down by 2023.
The U.S. central bank predicted that Russia’s conflict with Ukraine will “increase inflationary pressures and dampen economic growth.” The more you read, the better.
Dante DeAntonio, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, said that the Russian invasion of Ukraine “adds some uncertainty to the picture since energy prices have increased and the business and consumer mood has taken a knock.”
“However, given the difficult employment climate that persists, we expect employers to largely look past the near-term volatility.”
State unemployment benefit claims for the week ending March 12 declined by 15,000 to a seasonally adjusted 214,000. Reuters polled economists, who predicted 220,000 applications in the most recent week. Michigan, California, and Ohio had significant rises despite New York’s 16,006 claim decline.
From a record high of 6.149 million in early April 2020, claims have decreased. Due to supply chain interruptions and record-high gasoline prices, the Russia-Ukraine conflict, which has been raging for three weeks, poses a threat to the U.S. job market.
Many experts believe the job market and economy will weather the storm because of the high need for workers.
At the end of January, there were 11.3 million job opportunities, with an all-time high of 1.8 positions available for every unemployed individual. To help alleviate the impact of rising gas costs, wage growth has been boosted by this imbalance between demand and supply.
Speaking to reporters on Wednesday, Federal Reserve Chair Jerome Powell referred to the job market as “very tight,” saying that “we think this labor market can absorb” “tighter monetary policy.”
The economy appears to be holding up so far. There was a considerable increase in factory activity in the mid-Atlantic region in March, according to the second report from Thursday’s Philadelphia Federal Reserve.
Workers were employed, and working hours were extended in factories in eastern Pennsylvania, southern New Jersey, and Delaware region. Order backlogs, on the other hand, continued to grow as a result of rising input costs and delays in receiving materials.
A third report from the Federal Reserve showed that manufacturing grew 1.2 percent in February, despite a 3.5 percent drop in automobile output due to global scarcity of electronic components. The more you read, the better.
According to Shannon Seery, an economist at Wells Fargo, Russia’s invasion of Ukraine “may exacerbate supply concerns” in February, but “our research implies a fairly modest direct risk to manufacturing.”
The Wall Street stock market was higher. The dollar’s value decreased as measured against a group of currencies. The price of U.S. Treasury bonds increased.
A STRONG HOMEBUILDING STRENGTH
Last week’s claims statistics covered the period during which the agency questioned businesses for the nonfarm payrolls component of March’s jobs report. According to the most recent survey, job growth is expected in April, despite lower claims in February and March.
There were 678,000 jobs added to the economy in February. The return of some individuals to the workforce and a considerable drop in COVID-19 infections have contributed to employment growth.
There is a chance that more people will return to labor this month. There were 1.419 million people getting aid during the week ending March 5, the lowest figure since February 1970, according to a claims report.
Housing starts rose 6.8% to a seasonally adjusted annual pace of 1.769 million units in February, the highest level since June 2006, according to a fourth report from the Commerce Department.
Building permits declined 1.9% to 1.859 million units, but they are still close to the nearly 16-year peak reached in January, indicating that the acute shortage of housing will continue to drive home construction even as mortgage rates climb.
Construction of single-family homes, which make up the majority of all new housing starts, increased by 5.7% to a rate of 1.215 million units last month. Housing projects with five or more units started at a rate of 501,000 this year, an increase of 0.8 percent.
The number of houses that have been cleared for building but have yet to be started has reached a record high of 273,000 units. The more you read, the better.
According to Conrad DeQuadros, a senior economist at Brean Capital in New York, “The record-high number of units authorized but not started, combined with permits data, suggests that housing construction will continue to add to growth in the coming months, to the extent that builders can contend with supply constraints.”
The Atlanta Fed revised its GDP growth estimate for the first quarter from 1.2 percent to 1.3 percent in the aftermath of the data. At the end of February, it predicted that the economy would shrink by just 0.5 percent, but it has since increased its projection. In the final three months of the year, the economy expanded at a solid 7.0% annual rate.