US weekly jobless claims dip; labor market remains tight


People line up outside a newly reopened career center for in-person appointments in Louisville, US, April 15, 2021. REUTERS/Amira Karaoud/File Photo

Register now for FREE unlimited access to Reuters.com

  • Weekly jobless claims fall 2,000 to 229,000
  • Continuing claims increase 5,000 to 1.315 million

WASHINGTON, June 23 (Reuters) – The number of Americans filing new claims for unemployment benefits edged down last week as labor market conditions remained tight, though a slowdown is emerging.

Despite the second straight weekly decline reported by the Labor Department on Thursday, claims are hovering near a five-month high. Job cuts have been reported in the technology and housing sectors amid fears of a recession as the Federal Reserve aggressively tightens monetary policy to fight inflation.

“The labor market’s best days are behind it,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Companies are issuing warnings and pulling job offerings left and right, but it is not clear cut whether enough workers have lost their jobs to make a recession call.”

Register now for FREE unlimited access to Reuters.com

Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 229,000 for the week ended June 18. Economists polled by Reuters had forecast 227,000 applications for the latest week. Claims have been treading water since tumbling to more than a 53-year low of 166,000 in March.

While agreeing that there has been a loss of momentum in the labor market, some economists also blamed the stalled progress in claims on stingy seasonal factors, the model used by the government to strip out seasonal fluctuations from the data, around this time of the year .

“The recent upward trend in the seasonally adjusted data has occurred mostly because unadjusted filings have not declined as much as the anticipated seasonal factors. Filings before seasonal adjustment have remained very low in recent weeks,” said Daniel Silver, an economist at JPMorgan.

Unadjusted claims fell 3,255 to 202,844 last week. Illinois and Florida reported large declines in claims, which helped to set off a notable increase in Michigan.

The overall labor market remains tight. There were 11.4 million job openings at the end of April, with nearly two openings for every unemployed person. But with rising reports of companies freezing hiring and withdrawing employment offers, job openings are set to trend lower.

US stocks opened higher. The dollar rose against a basket of currencies. US Treasury prices rose.

GROWTH SLOWING

Economists say claims would need to rise above the 250,000 level to help bring labor demand and supply back into balance to tame wage inflation. The US central bank last week raised its policy rate by three-quarters of a percentage point, its biggest hike since 1994. The Fed has increased its benchmark overnight interest rate by 150 basis points since March.

Its quest to dampen demand in the labor market and overall economy is fanning fears of a recession next year. Fed Chair Jerome Powell told lawmakers on Wednesday the central bank was not trying to engineer a recession to tame inflation, but was fully committed to bringing prices under control even if doing so risked an economic downturn. read more

Recent retail sales, housing and manufacturing data suggest the economy is already losing speed after appearing to have rebounded from the first quarter’s slump, which was mostly driven by a record trade deficit.

Last week’s claims data covered the period during which the government surveyed establishments for the nonfarm payrolls component of June’s employment report. Claims rose moderately between the May and June survey periods.

The economy added 390,000 jobs in May. The claims report also showed the number of people receiving benefits after an initial week of aid increased 5,000 to 1.315 million during the week ending June 11.

Next week’s data on the so-called continuing claims will shed more light on June’s employment report.

Register now for FREE unlimited access to Reuters.com

Reporting by Lucia Mutikani; Editing by Nick Zieminski and Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

.

Leave a Comment