By Andrew Moran
In a potential signal that the U.S. labor market could be on the cusp of renewed hiring momentum, recurring unemployment claims posted a sharp decline.
Continuing jobless claims fell by 31,000 to a lower-than-expected 1.833 million from the previous week’s 1.864 million, according to new data released by the Department of Labor on Feb. 26.
Recurring claims reflect the number of individuals currently receiving unemployment benefits.
After remaining above 1.9 million from May to November 2025, continuing claims have been trending downward, sliding below this level for seven consecutive weeks.
The weekly measurement can serve as a gauge for the challenges jobless people may have in finding work in today’s employment climate. Additionally, it could continue to serve as a proxy for the exhaustion of unemployment benefits, since many states limit eligibility to 26 weeks.
Initial jobless claims—a gauge for the number of Americans filing first-time applications for unemployment benefits—ticked up by 4,000 to 212,000 for the third week of February. The consensus estimate was 215,000.
Last month’s severe winter storm, which blanketed many parts of the country, sparked a spike in jobless claims as many businesses shuttered and employment agencies temporarily closed. Over the past two weeks, initial claims have been stabilizing and are now hovering near the historically low average of 200,000.
The four-week average, which removes week-to-week volatility, was little changed at 220,250.
State of the Labor Market
Next week will see a flurry of fresh labor market indicators.
Payroll processor ADP will publish private-sector employment data, while global outplacement firm Challenger, Gray and Christmas will report on planned job cuts.
The main event will be on March 6, when the Bureau of Labor Statistics releases the February nonfarm payrolls report.
Early estimates suggest the U.S. economy created 70,000 jobs this month and the unemployment rate held steady at 4.3 percent.
Despite 2024 and 2025 recording substantial downward revisions in job creation, market watchers suggest that the economy could be at the start of a reacceleration due to fiscal and monetary stimulus and greater tariff certainty following the Supreme Court’s decision.
“The US economy appears to be emerging from a soft patch, evidenced by soft labor market fundamentals, historically low consumer confidence, weak manufacturing activity, and a depressed housing market,” John Belton, portfolio manager at Gabelli Funds, said in a note emailed to The Epoch Times.
“The outlook is now for growth re-acceleration.”
Economists and policymakers have debated whether the labor market faces a supply challenge or a demand issue.
New data from Indeed indicate that job searches rose last month, while job postings in blue-collar and seasonal sectors declined. However, a broad array of professional fields has registered a modest 5 percent increase in job postings.
“Market leverage in the labor market has shifted to employers, with job openings per unemployed persons now below 1.0, and time-to-hire lengthening as companies can afford to be selective in hiring,” Indeed labor economists said in a Feb. 19 note.
Speaking at the Boston Fed on Feb. 24, Fed Governor Christopher Waller expressed caution.
While the economy added 130,000 jobs in January and the unemployment rate dipped to 4.3 percent, Waller is unsure whether this suggests the labor market has “turned a corner” or will be revised away.
The February jobs report could set the stage for his position at next month’s policy meeting.
“If the good labor market news of January is revised away or evaporates in February, it would support my position at the FOMC’s [Federal Open Market Committee] last meeting, that a 25-basis-point reduction in the policy rate was appropriate,” Waller said.
Waller dissented at the January meeting, supporting a quarter-point rate cut.
Fed Governor Lisa Cook, speaking at a National Association of Business Economists event on Feb. 24, examined the effects artificial intelligence (AI) may be having on employment.
Cook pointed to AI’s impact on specific occupations and to its raising the unemployment rate for recent college graduates. But the overall jobless rate remains low, and layoffs are muted.
“Therefore, we do not yet know the exact evolution of this labor-market transition nor its intensity,” Cook said in prepared remarks.
Investors overwhelmingly expect the Fed to keep the benchmark federal funds rate unchanged in the 3.5 percent to 3.75 percent range, according to the CME FedWatch Tool.
Reuters contributed to this report.
