Fully Reversing the Prior Week's Rise

• Initial claims for unemployment insurance fell by 20,000 to 192,000 in the week ending March 11.
• The four-week moving average of initial claims was unchanged at 197,000.
• Continuing claims fell by 29,000 to 1,684,000 in the week ending March 4.
• Both initial and continuing claims remain low by historical standards, but face headwinds in maintaining that standing.

Initial claims for unemployment insurance (UI) decreased by 20,000 to 192,000 for the week ending March 11, fully reversing the rise in the previous week. Layoff announcements across industries – but especially concentrated in tech – typically take time to go into effect after initial news breaks. One influence on initial UI claims in the coming weeks, however, could be the saturation of businesses that have been quickly absorbing laid-off workers. With talk of deteriorating economic conditions and in the wake of the recent bank failures, businesses may turn more cautious in their hiring practices. Thus, any new layoffs in the months to come would more directly translate into higher UI claims.

The four-week moving average of claims, which smooths out some of the weekly volatility, was unchanged at 197,000 in the week ending March 11 and remains among the lowest values since the data began in the late 1960s. A reversal in this smoothed metric will be necessary before markets can be confident in a reversal in the U.S. labor market’s exceptionally tight conditions. Continuing claims for unemployment insurance fell by 29,000 to 1.684 million in the week ending March 4. The four-week moving average of continuing claims dipped by 2,000 to 1.677 million. The insured unemployment rate held steady at a very low 1.2% in the week ending March 4.

Although hiring in the U.S. economy remains strong, there appears to be the potential for more slack in hiring trends set for the coming months. This is not to say that economic conditions are set to collapse entirely. Rather, any newly laid-off workers are not as likely to be so quickly rehired as businesses assess their plans to weather what we expect will be a mild recession in the second half of this year. Any workers who suffer a job loss in the coming months will be more likely to need UI benefits than those who have recently dealt with layoffs but have had the advantage of businesses’ still insatiable appetite for hiring thus far.