LIVE MARKETS-Jobless claims: Low-hire, low-fire mode?

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JOBLESS CLAIMS: LOW-HIRE, LOW-FIRE MODE?

In a fairly light week for economic indicators, those starving for data on Thursday had but one morsel to chew on: the Labor Department's weekly jobless claims data.

Last week, 210,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, 5,000 more than the previous week and nailing the consensus estimate.

Ironing out weekly volatility, the four-week moving average of initial claims is moving nearly exactly sideways, shuffling along the lower end of the range associated with healthy labor market churn.

But while low initial claims are often associated with a strong jobs market, other data - particularly the dour February employment report, which showed the U.S. economy unexpectedly shed jobs last month as the unemployment rate crept higher - suggest the U.S. economy is in a low-hire/low-fire phase.

Are employers stuck in wait-and-see mode in the face of geopolitical and economic uncertainties? If so, with signs that inflation is once again on the rise, where does that leave our friends at the Fed?

The most recent JOLTS report - not to mention February's disappointing jobs data - predates the Iran conflict.

"The US/Israel war with Iran has made the labor market more vulnerable," says Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "We think downside risks to the labor market leave the Fed on track to lower rates twice this year with the first cut coming in June."

Ongoing jobless claims USJOBN=ECI, which are reported on a one-week lag, decreased by 1.7% to 1.819 million, steeper than the 0.3% dip analysts expected.

That's the lowest continuing claims reading since May 2024. So why does consumer survey data suggest laid-off workers are finding it increasingly difficult to find replacement gigs?

It's an open question whether that tide is beginning to turn, or if unemployment benefits have passed expiry for an increasing number of jobless Americans.

"We continue to think that hiring will remain too weak to absorb even the now glacial pace of increase in the labor force, gradually pushing the unemployment rate up again over the next six months or so, and putting further Fed easing back on the table," writes Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.

(Stephen Culp)

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