Core Data Overview

  • In the week ending March 7, U.S. initial jobless claims decreased by 1,000 to 213,000, a change that partially offset several signals of a weakening near-term employment outlook.
  • Data released by the U.S. Department of Labor on Thursday showed that continuing claims for the week ending February 28 also declined, falling to 1.85 million from 1.87 million in the previous week.
  • Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, noted in a report that although layoffs remain low, "various indicators measuring hiring activity continue to weaken, indicating that labor market slack will persist, especially among new entrants to the labor force not covered by claims data, who face greater difficulty finding jobs."

In-Depth Analysis: Diverging Signals in the Job Market

According to economists at the Federal Reserve and private sector institutions, for several weeks U.S. companies have generally adopted a strategy of scaling back hiring while limiting layoffs, as they navigate tariff policy uncertainty, slowing economic growth, and heightened geopolitical tensions.

Executives at major U.S. companies are cautious about adjusting staffing levels. Joshua Bolten, CEO of the Business Roundtable, said in a statement on Wednesday that "the number of CEOs planning to cut workers is roughly equal to those planning to add workers," reflecting a wait-and-see attitude in the business community.

This year, several well-known companies, including Amazon, Meta, UPS, and Oracle, have announced layoff plans, which to some extent has deepened the impression of an unstable job market.

In fact, data released last week showed that the U.S. economy unexpectedly lost 92,000 jobs in February. The losses affected multiple industries, including manufacturing, warehousing, transportation, and healthcare, and pushed the unemployment rate up 0.1 percentage point to 4.4%. This result contradicts the view of many Fed officials who had believed the labor market was strengthening.

However, in contrast to the weak employment data, a Business Roundtable survey released Wednesday showed that CEO optimism rebounded this quarter, with many expecting sales growth over the next six months and planning to increase capital expenditures.

The Federal Reserve will meet next week to assess these mixed signals from the labor market, while also considering the risk that the Iran war could further push up oil prices, exacerbate inflation, and weigh on economic growth.

Amid concerns that the war could trigger a surge in price pressures, traders in the interest rate futures market have increased their bets that the Fed will keep its benchmark rate unchanged through October.

On Thursday, Iran's new leader Mojtaba Khamenei confirmed plans to ban oil and other cargo through the Strait of Hormuz, a statement that further dampened expectations for lower borrowing costs.

According to interest rate futures data tracked by the CME Group's FedWatch tool, the probability that the Fed will keep its current main rate unchanged after its meeting scheduled for October 27-28 has risen to 54.3% from 25.5% on March 5.

Currently, the target range for the U.S. federal funds rate remains between 3.5% and 3.75%.