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US Weekly Unemployment Claims Continue To Decline As Strength In Labor Market Persists

US Weekly Unemployment Claims Continue To Decline As Strength In Labor Market Persists
The number of new claims for unemployment benefits filed by Americans decreased last week, suggesting that the labour market is still strong and will likely sustain the economy going forward.
The Labour Department's report on claims for the second consecutive week on Thursday undid the majority of the increase in applications at the beginning of the month, which had brought them to a level last observed at the end of August. Layoffs are still extremely rare, even if the combined effect of the significant Federal Reserve interest rate rises in 2022 and 2023 is reducing employment growth.
"Claims settled down from the previous week, so the acceleration some had feared hasn't come to pass," said Robert Frick, corporate economist at Navy Federal Credit Union. "The labor market remains robust, and if claims are the canary in the coal mine for jobs, it has yet to develop a mild cough."
For the week ending May 18, the number of initial claims for state unemployment benefits decreased by 8,000, to a seasonally adjusted 215,000. According to Reuters surveyed economists, 220,000 claims were expected in the most recent week. Claims that were not modified fell by 5,663 to 192,017. The number of filings in Indiana and California decreased considerably.
After having trouble hiring during and after the COVID-19 epidemic, most businesses are hanging onto their employees.
Since March 2022, the US Federal Reserve has increased its policy rate by 525 basis points in an effort to reduce economic demand.
In the policy meeting minutes from April 30-May 1, which were released on Wednesday, officials from the Federal Reserve stated that "demand and supply in the labour market, on net, were continuing to come into better balance, though at a slower rate." They did, however, add that things had "generally remained tight."
Since July, the Fed has maintained its benchmark overnight interest rate in the current range of 5.25% to 5.50%. The first rate decrease is anticipated by the financial markets to occur in September. The robust labour market has contributed to the economy's resistance to recessionary forecasts.
The time frame for which the government polled employers for the nonfarm payrolls section of May's jobs report was covered by the claims data. Between the survey weeks of April and May, claims increased somewhat.
Next week's data on the number of recipients of benefits following an initial week of aid—a proxy for hiring—may provide more insight into the status of the labour market. In April, the economy created 175,000 new employment.
According to the claims data, the so-called continuing claims increased by 8,000 to a seasonally adjusted 1.794 million in the week that ended on May 11. The number of continuing claims is historically low.
The labour market is not showing any signs of really collapsing, according to FWDBONDS chief economist Christopher Rupkey. "Given the level of monetary restraint the Fed has implemented to maintain economic stability and combat inflation, there is no justification for businesses to decrease personnel at their companies any more."

Christopher J. Mitchell

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