US jobless claims drop by most since July, led by New York

Continuing claims, which include people who have received unemployment benefits for a week or more, fell by 29,000 to 1.68 million in the week ended March 4. Economists watch this measure closely to discern how hard it is for people to find work after losing their job.

On an unadjusted basis, claims fell to 217,444 as New York unwound most of its jump from the prior week, which could have been due to school holidays. In that period, applications also surged in California, where severe weather may have played a factor.

The data show continued strength in an extremely tight labor market, marked by robust job creation, millions of openings and low unemployment. However, several measures of wage growth are slowing and largely still lag inflation, which could be starting to weigh on spending. And layoffs at companies like Meta Platforms Inc. keep piling up.

When taken with the recent turmoil in the banking sector driven by Silicon Valley Bank and Credit Suisse Group AG, it makes for a challenging backdrop for the Federal Reserve ahead of its policy meeting next week.

The four-week moving average in initial claims, which smooths out some of the volatility in the weekly data, edged down to 196,500.