U.S. weekly jobless claims grind lower amid tight labor market

People walk past a “We’re Hiring” sign posted outside a restaurant in Arlington, Virginia on June 3, 2022.

Olivier Douliery | AFP | Getty Images

The number of Americans filing new claims for unemployment benefits fell slightly last week as labor market conditions remained tight, although some slowdown is emerging.

Initial claims for state unemployment benefits fell by 2,000 to a seasonally adjusted 229,000 for the week ended June 18, the Labor Department said Thursday. Economists polled by Reuters had forecast 227,000 applications for the past week.

Claims have been treading water since dropping to a more than 53-year low of 166,000 in March amid signs of some cooling in the labor market. Job cuts were reported, mainly in the technology and housing sectors, the latter seeing a moderation in activity as mortgage rates rise in response to rising inflation expectations and aggressive hikes in mortgages. Federal Reserve interest rate.

However, the labor market as a whole remains tight. There were 11.4 million job vacancies at the end of April, with nearly two vacancies for every unemployed person. Economists say claims should top 250,000 to help rebalance labor supply and demand to keep wage inflation under control.

The U.S. central bank last week raised its key rate by three-quarters of a percentage point, its largest hike since 1994. The Fed has raised its overnight rate by 150 basis points since March.

Its quest to dampen demand in the labor market and the overall economy is stoking fears of a recession next year. Fed Chairman Jerome Powell told lawmakers on Wednesday that the central bank was not trying to cause a recession to get inflation under control, but was fully committed to bringing prices under control, even if it risked causing an economic slowdown. .

Recent data on retail sales, housing and manufacturing suggest the economy is already losing steam after appearing to rebound from the first quarter slump, which was mainly driven by a record trade deficit.

Last week’s claims data covered the period the government surveyed establishments for the non-farm payrolls component of the June jobs report. Applications increased 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 a first week of help rose by 5,000 to 1.315 million in the week ending June 11.

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

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