US Labor Market Steady, Tariffs and Government Layoffs a Risk to Outlook

• The number of Americans filing new applications for unemployment benefits fell more than expected last week, suggesting that the labour market remained stable in February, though turbulence lies ahead from tariffs on imports and deep government spending cuts.
• That was flagged by other data on Thursday, March 6, showing layoffs announced by U.S.-based employers jumped in February to levels not seen since the last two recessions amid mass federal government job cuts, cancelled contracts and fears of trade wars.
• "Evidence is mounting that elevated uncertainty about the outlook for federal policies and still-tight monetary policy is pushing redundancies higher," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.
• Initial claims for state unemployment benefits dropped 21,000 to a seasonally adjusted 221,000 for the week ended March 1, the Labor Department said. Economists polled by Reuters had forecast 235,000 claims for the latest week. The decline reversed the prior week's surge, which had lifted claims to a two-month high and was blamed on snowstorms and difficulties adjusting the data for seasonal fluctuations around the Presidents Day holiday.
• A separate unemployment compensation for federal employees (UCFE) program, which is reported with a one-week lag, showed applications rising to a four-year high of 1,634 from only 614 during the week ending February 15.
• For now, the overall labour market continues to plod along. The Federal Reserve's "Beige Book" report on Wednesday described employment as having "nudged slightly higher on balance" since mid-January. Labour market stability is critical to the U.S. central bank's ability to keep interest rates unchanged while policymakers monitor the economic impact of tariffs and an immigration crackdown.

(Source: Reuters)