Unemployment claims dip to 229,000, but red-hot labor market might be cooling off

Unemployment claims dip to 229,000, but red-hot labor market might be cooling off

The numbers: New filings for unemployment benefits fell by 2,000 last week to 229,000, but jobless claims remained near a five-month high in a sign the red-hot labor market might be cooling off slightly as the US economy slows.

New filings for unemployment benefits fell by 2,000 last week to 229,000 but remained near a five-month high, suggesting a slight cooling in a red-hot labor market as the US economy slows.

Economists polled by the Wall Street Journal forecast initial jobless claims to total 225,000 in the seven days ended June 18. The figures are seasonally adjusted.

New filings had fallen to as low as 166,000 in late March — the second fewest on record — before moving modestly higher over the past few months.

The four-week average of new jobless claims, which smooths out the temporary ups and downs, rose to 223,500. That’s the highest level since the end of January.

Big picture: The number of layoffs fell to a record earlier this year as companies sought to fill a record number of job openings — there’s two open jobs for every unemployed person in America.

Yet economists are watching closely to see if layoffs start to rise and hiring slows as the US enters another turbulent period. The Federal Reserve is raising interest rates quickly to try to tame the worst inflation in 40 years, a strategy that’s likely to slow the economy and perhaps even trigger a recession.

Key details: New claims fell the most in Illinois and Florida. The only state to post a notable increase in Michigan.

Thirty-four of the 53 states and US territories that report jobless claims showed a decline. Nineteen reported an increase.

The number of people already collecting unemployment benefits, meanwhile, rose from 5,000 to 1.32 million.

While these so-called continuing claims are at the lowest level since 1969, they have risen three straight weeks for the first time this year. Economists say the labor market remains historically strong, but the trend bears watching.

looking ahead: “While labor markets remain tight and we expect job growth to continue even as the economy slows, reports of layoffs in some sectors are on the rise,” said Nancy Vanden Houten, lead US economist at Oxford Economics.

“Demand for labor is strong, layoff activity is low, and conditions are tight,” said money market economist Thomas Simons of Jefferies. “There is still strong competition for available labor.”

Market reaction: The Dow Jones Industrial Average DJIA,
-0.15%
and S&P 500 SPX,
-0.13%
were set to open higher in Thursday trades.

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