Initial claims for unemployment insurance remained very low for the week ended February 25, decreasing sharply to 223,000 from a revised 242,000 a week ago. That result was well below the expectations of economists, who had projected little change.
The four-week moving average for claims also declined by 6,250 to 234,250 – a low point in the current cycle.
Both the weekly claims tally and the four-week average are at their lowest point in forty years. Even that doesn’t tell the full story though, as the labor market was considerably smaller in 1973 – the last time that either measure was lower than it is today.
Layoffs had been at low levels for some time, but appear to have dipped even further in recent weeks. Business confidence has improved considerably on the promise of President Trump’s pro-growth agenda. Most notably perhaps, confidence in the small business sector – long a key engine for job creation – has soared, indicating a much greater willingness for small businesses to expand their payrolls.
Moreover, with the jobless rate now below 5 percent and job creation remaining on a solid path, employers are finding it increasingly difficult to find qualified help. Job openings are up, and evidence of accelerating wage gains suggest and increasingly competitive landscape for workers.
Against such a favorable backdrop for workers, it seems likely that layoffs could remain low as long as the expansion stays on track and the underlying catalyst for the surge in optimism appears likely to come to fruition. The greatest risk to that rosy outlook at this point appears to be the potential for delays, compromise, or an outright failure to implement the administration’s agenda – a political reality that shouldn’t be overlooked.
With the February jobs report on deck shortly, all indications are that the labor market remains on track and gains in February shouldn’t disappoint. The bottom line is that the economy has gathered a bit of momentum for now, and both workers and those looking for a job should benefit.