Weekly jobless claims are another sign the labor market is holding up

Claims for unemployment dropped more than expected last week.

The number of people filing for jobless benefits for the first time fell to 205,000, the lowest level since January. That is one week of data, so it’s hard to draw broad conclusions. But it’s one more data point that gives credence to the U.S. Federal Reserve’s assessment yesterday that the labor market appears to be holding up.

Weekly jobless claims represent one of the first places to look for signs that recent geopolitical turbulence is destabilizing the labor market.

“This is consistent with what we understand to be kind of a boring job market,” said Mark Hamrick, senior economic analyst at Bankrate.

He said it’s basically the same low-hire, low-fire environment that has been the case for months. A lack of new jobs means it’s taking longer for unemployed people to find work, pushing continuing claims higher — 10,000 more in the week of March 7.

But it looks like most firms are holding onto workers, said Elizabeth Crofoot, principal economist at Lightcast.

“It’s a gradual rebalancing of the labor market, not a full on deterioration,” she said.

That may sound surprising when following the news, said Daniel Zhao, chief economist at Glassdoor. There have been big layoff announcements from Amazon, Block, UPS, Meta, and others.

“But when we actually look at the macro data, we see that layoffs are relatively similar to where they were before COVID,” Zhao said. “We aren't seeing this dramatic surge in layoffs.”

Some of those cuts might never show up in jobless claims, said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas.

“If you get let go from a large tech company and you get a severance package, there might not be a need for you to go claim that insurance,” he said.

Those job losses would show up in the unemployment rate, which as of last month was 4.4% — relatively low by historic standards.