US claims for unemployment benefits fell from the previous week, coming in below expectations in a bullish sign for an otherwise cooling labor market.
Initial jobless claims fell by 9,000 to 202,000 for the week ending March 28, the Labor Department reported Thursday. Economists had been expecting 212,000 claims, according to Bloomberg consensus estimates.
Continuing claims, which track the unemployed population still seeking work, rose to 1.84 million for the week ending March 21 from a revised level of 1.2 million the week before.
The S&P 500 (^GSPC), Dow Jones Industrial Average (^DJI), and Nasdaq Composite (^IXIC) fell by more than 1% at the market open after the data release.
Read more: What are jobless claims, and why do they matter?
The jobless claims figure comes after ADP data on Wednesday showed that private payrolls fell slightly month over month in March but strongly beat expectations.
The private sector added 62,000 jobs in March, according to ADP, slightly below February’s 66,000 but well above expectations of 40,000.
Annual pay changes for people who stayed at their jobs remained steady with a 4.5% increase for the third month in a row, while job-changers saw their pay rise 6.6%.
The data “suggests the labour market is no longer deteriorating sharply, but it’s far from robust,” Natixis CIB economist Christopher Hodge wrote in emailed commentary. Recent volatility from poor weather and major strikes has also skewed first quarter data, Hodge said.
Still, a separate report from Challenger, Gray & Christmas on Thursday showed that layoff plans increased last month, with US employers announcing 60,620 job cuts in March.
The signals from the labor market could keep the Fed in its wait-and-see approach, as negative impacts on growth from the Iran war counterbalance concerns about energy-driven inflation spikes.
“A cooling labor market eases wage pressure, giving policymakers room to stay patient and potentially cut rates later this year,” said Gina Bolvin, president of Bolvin Wealth Management Group.
Bank of America economists are now predicting that US growth will fall by 50 basis points to 2.3% for 2026, with headline inflation now forecast to reach 3.6% in 2026, up from previous forecasts of 2.8%, the economists wrote in a client note on Wednesday.
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
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