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THE BAND WARMS UP FOR PAYROLLS: JOBLESS CLAIMS, LAYOFFS, LABOR COSTS/PRODUCTIVITY, IMPORT PRICES

Investors were given a heaping plate of economic indicators on Thursday, including some morsels to chew on ahead of Friday's jobs report.

Last week, 213,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, a carbon copy of the prior week's print, and 2,000 fewer than analysts expected.

Ironing out weekly volatility, the four-week moving average of initial claims now has a clear downward bias, but remains well within the range associated with healthy labor market churn.

So far it seems as if recent, high-profile job cut announcements have yet to boost applications for unemployment benefits.

On that subject, outplacement firm Challenger, Gray & Christmas (CGC) USCHAL=ECI reports U.S. firms announced 43,307 layoffs in February.

That marks a 55% monthly decline and is 72% fewer than the number of job cuts announced a year ago.

There have been a total of 156,742 layoffs announced so far in 2026, the lowest January-February since 2022, but the fifth largest since 2009, when the economy was clawing its way out of the Global Financial Crisis.

That's refreshing, coming off the most crushing year for job cuts since 2010.

While that's "a nice reprieve from the elevated job cut plans to start the year," Andy Challenger, workplace expert at CGC warns that "with U.S. involvement in a growing war in Iran, the end of Q1 may bring more layoff plans as companies tighten belts amid uncertainty and higher costs."

So far this year, jobs in the technology sector are most often in the crosshairs.

"Tech is responding to a number of pressures right now. AI is the big story, but there are also global regulatory concerns," Challenger adds.

AI has been blamed for 12,304 job cuts so far in 2026, or 8% of total downsizing plans.

On the hiring side, announced hires total 18,061 so far this year, down 56% from the same two-month period last year.

Continuing jobless claims USJOBN=ECI reported on a one-week lag, jumped 2.5% to 1.868 million, or 18,000 north of consensus.

The uptick jibes with consumer survey data, which suggests laid-off workers are finding it increasingly difficult to find a replacement gig.

"We still think the unemployment rate rebounded to 4.4% in February, from 4.3% in January, given the residual seasonality in the numbers and the further deterioration in job availability reported in the Conference Board’s survey over the last six months," writes Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "While firing is low, the rate of hiring remains insufficient to absorb all the job losers and new entrants to the labor market."

As if all that weren't enough, the Labor Department tossed in its initial take on fourth-quarter labor costs and productivity.

In the October-December period, unit labor costs USLCP=ECI — which gauge the average cost of labor per unit of output produced — jumped by 2.8% at a quarterly annualized rate, barging right past the 2.0% increase predicted by economists and bouncing back from Q3's 1.8% decline.

Productivity USPROP=ECI — which measures average output per hour — also printed at 2.8%, a sharp deceleration from the previous quarter's 5.2% surge.

Consensus called for 1.9% productivity growth.

All of the above is prologue to the Labor Department's employment report due tomorrow, which is expected to show the U.S. economy added an unimpressive 59,000 jobs in February, with the unemployment rate repeating January's 4.3% print.

Finally, the cost of goods and services imported to the United States USIMP=ECI rose by 0.2% in January, an echo of December and hitting the expectations bull's-eye. Year-on-year, import prices edged 0.1% lower.

But that softness is likely temporary.

While import prices (which exclude tariffs) are the coolest U.S. inflation indicator in the business (for now), they are also subject to things like foreign economies, geopolitical turmoil, and currency exchange rates.

"Weak fuel prices weighed on headline import prices in January, while prices for other imported goods continued to rise," says Grace Zwemmer, U.S. economist at Oxford Economics. "The recent rise in global oil prices following renewed conflict in the Middle East adds upside risk to fuel import prices moving forward."

(Stephen Culp)

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