Remaining at Very Low Levels

• Initial claims for unemployment insurance fell by 2,000 to 190,000 in the week ending February 25. The four-week moving average of initial claims edged up by 2,000 to 193,000.
• Continuing claims fell by 5,000 to 1,655,000 in the week ending February 18.
• Both initial and continuing claims are extremely low in early 2023 as the labor market remains historically strong.

Initial claims for unemployment insurance fell by 2,000 to 190,000 in the week ending February 25 from an unrevised 192,000 in the previous week. This is the seventh straight week that initial claims have been in a narrow range of 183,000 to 195,000. The four-week moving average of claims, which smooths out some of the weekly volatility, edged up by 2,000 to 193,000 in the week ending February 25. This is near the lowest the four-week moving average has been since April 2022 and is among the lowest the four-week moving average has been since the data began in the late 1960s. 

Continuing claims for unemployment insurance fell by 5,000 to 1.655 million in the week ending February 18 from an upward-revised 1.660 million in the previous week. The four-week moving average of continuing claims rose by 1,000 to 1.672 million in the week ending February 18, from a slightly upward revised 1.671 million the previous week, and remains very low on a historical basis. 

Both initial unemployment insurance claims and continuing claims measures remain extremely low and indicate ongoing strength in the labor market in the first two months of this year.  Although company layoff reports are becoming more common, those layoffs are not yet showing up in the unemployment insurance data. Some of this may be timing; if the company offers severance the claims are not counted until the severance expires. But even so, the job market remains remarkably strong. Initial claims are near their lowest levels in since the late 1960s, and continuing claims, after increasing slightly at the end of last year, are now falling and extremely low on a historical basis. 

The US economy added a very strong 517,000 jobs in January, well above expectations. Although there are reasons to think that the January jobs report may have overstated the strength in the labor market, there is no question but that the job market is very strong. We expect February payrolls jobs to rise by close to 215,000 when reported on March 10. 

Hiring remains robust in early 2023 and businesses continue to have difficulties in finding and retaining workers. The unemployment rate fell to 3.4% in January and likely held there in February, the lowest it has been since 1969. Strong earned income growth and the 8.7% rise in social payments in January ($8.9 billion) cleared helped boost consumer spending as retail sales rose by a near-record 3% in January.