Jobless claims fall to lowest level since 1969

New weekly applications for jobless aid fell last week to the lowest seasonally adjusted level since September 1969, according to data released Thursday by the Labor Department.

In the week ending March 19, initial claims for unemployment insurance totaled 187,000, falling 28,000 from the previous week’s revised level. Last week’s total was the lowest since 182,000 Americans filed claims to start receiving jobless aid during the week of Sept. 6, 1969.

The sharp dip in jobless claims is the latest signal of high demand for workers as businesses continue to face labor shortages and other hiring challenges.

“That initial unemployment claims fell to a jaw-dropping 187,000 in the most recent week is proof that the labor market is growing even tighter and we should expect hiring to stay at least as strong as it’s been over the last few months,” said Robert Frick, corporate economist at the Navy Federal Credit Union.

“While higher inflation — especially in gas prices — will take a toll on discretionary spending, most signs point to the economy strengthening quickly now that the Omicron wave has largely waned.”

The U.S. has already added more than 1 million jobs in 2022 after adding 6.8 million last year, pushing the unemployment rate down 3.8 percent. Even so, businesses are still struggling to fill a record number of job openings from a labor force down millions of workers from its pre-pandemic size. 

Workers have also quit their current jobs at unprecedented rates, typically to take new gigs with better compensation or career opportunities.

With intense demand for workers making it harder and more expensive to hire and retain staff, businesses have been reluctant to make layoffs, even through most of the omicron wave in January.

High demand for workers and the resilient consumer spending driving it have helped power the economy through several waves of coronavirus variants and the turmoil in markets driven by the Russian invasion of Ukraine. Wages also rose 5.1 percent over the 12 months ending in February as businesses compete for scarce workers.

Even so, labor shortages are one of several forces pushing prices higher, adding to a mess of supply chain disruptions that have helped fuel the highest annual inflation in four decades.

The Federal Reserve this month began a series of interest rate hikes meant to cool off what Fed officials consider excess consumer demand — a level of consumer spending beyond what businesses can meet without rapidly raising prices. 

Hiking interest rates increases the costs of borrowing for both consumers and businesses, which often slows down spending and hiring. The Fed hopes to reduce demand enough to push inflation lower without interrupting the growth of an otherwise strong economy.

Economists say the Fed faces a difficult task in hiking rates fast enough to slow inflation but slowly enough to keep the economy growing. Even so, Fed Chairman Jerome Powell expressed confidence last week the Fed would be able to tame an “overheated” labor market without keeping anyone out of work given the high level of job openings.