According to Reuters, U.S. unemployment benefits had increased past analyst expectations last weeks, but the number of Americans on jobless rolls fell to the lowest level since 1973 which may tighten labor market conditions. State unemployment benefits increased 24,000 to an adjusted 242,000 for the week ended March 31. Economists forecasted claims rising to 225,000 but last week’s increase displayed difficulties adjusting data due to holidays such as Easter and spring break in schools.
Economists claim that the labor market is close to full employment. The U.S. jobless rate is at a 17 year low at 4.1%. The Federal Reserve has predicted it at 3.8% by the end of 2018. Economists predict that tightening labor market conditions will push wage growth in the second half of 2018.
Jobless claims have sharp swings from week to week, the monthly average has a better display on the overall health of the labor market so holidays such as Easter and spring break will not be as impactful.
“Claims jumped after a decline, with the volatility probably due in large part to seasonal adjustment problems relating to Easter timing,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics. “The trend remains low, consistent with the trend in employment growth remaining more than strong enough to keep the unemployment rate trending down.”