Unemployment claims fell last week amid a tight labor market

New applications for US unemployment benefits fell slightly last week as employers kept their workers in a tight labor market.

The Labor Department said initial jobless claims, an agent for layoffs, fell to 180,000 last week from the revised level the previous week.

Unemployment claims have remained near historic lows since late 2021. The four-week average of claims, which moderates volatility, rose to 179,750 from a revised 177,500 in the previous week. The four-week average hit an all-time low this month, at 170,500.

Continuing Claims, a proxy for the total number of people receiving payments from state unemployment programs, fell to 1.4 million for the week ended April 16 from the previous week’s level. Continuing claims are reported with a difference of one week.

Other indications are that the US labor market has been on strong foundations.

Employers have added an average of 600,000 jobs a month over the past six months and the unemployment rate fell to 3.6% last month, roughly equaling the half-century low reached just before the pandemic.

Some economists also described the labor market negatively. Federal Reserve Chairman Jerome Powell said the US labor market was “tight to an unhealthy level” at a press conference last month, referring to the difficulty for many employers to find workers.

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The labor force participation rate — the proportion of the population aged 15 to 64 working or looking for work — remained below pre-pandemic levels in March and there were nearly two vacancies per unemployed person at the start of the year, according to the Labor Department.

“The labor market right now is much tighter than it was before the pandemic,” said Karl Tannenbaum, chief economist at financial services firm Northern Trust..

Mr. Tannenbaum said the mismatch between available jobs and the skills workers have or where they live has contributed to the tight labor market.

“There is certainly evidence that a lot of the help that is needed does not match up well with the help that is available. Many of the people who are still not working come from relatively low-paying occupations,” Mr. Tannenbaum said. Before the pandemic, when the entertainment and restaurant industry came to a halt, I would have moved on.”

The tight labor market also led to higher wages. Average hourly wages for private sector workers rose 5.6% in March from the previous year, a much faster rate than it was before the pandemic, according to the Labor Department.

However, wage gains follow consumer price growth, which was 8.5% higher last month than a year ago.

“Although wages were already growing very quickly, in some sectors they need more growth in order to relieve some of the pressure on the labor market,” said Mr. Tannenbaum.

write to Brian Mina at bryan.mena@wsj.com

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It appeared in the April 29, 2022, print edition as “New Unemployment Claims Fall in Tight Market.”

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