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U.S. labor market tightening

The number of Americans filing for unemployment benefits fell last week, pointing to sustained labor strength even as economic growth appears to have slowed early in the first quarter.

Labor market strength and a steady increase in price pressures could pave the way for the Federal Reserve to raise interest rates at its March 20-21 policy meeting. The U.S. central bank has forecast three rate increases for this year, but some economists believe it will raise its projection to four hikes at the meeting.

“The strong willingness of companies to hold onto labor is a strong signal of the difficulty of replacing workers,” said John Ryding, chief economist at RDQ Economics in New York. “At this point we would expect another robust gain in jobs (in March) and a drop in the unemployment rate to 4.0 percent.”

The economy created 313,000 jobs in February and the unemployment rate remained at a 17-year low of 4.1 percent.

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