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The number of America filing new claims for unemployment benefits increased last week, while unit labor costs in the first quarter rose less than estimated.
This data indicates that the labor market is cooling, albeit not sufficiently to prompt the Federal Reserve to consider cutting interest rates soon.
According to the Labor Department, initial claims for state unemployment benefits rose by 8,000 to a seasonally adjusted 229,000 for the week ended June 1. This exceeded economists’ expectations, who had forecast 220,000 claims. The increase in claims suggests a slight easing in the labor market.
Continuing claims, which track those receiving benefits beyond the first week, increased by 2,000 to a seasonally adjusted 1.792 million during the week ending May 25.
Despite the rise, continuing claims remain low by historical standards, indicating that people who lose their jobs find new employment relatively easily.
“The level (of weekly jobless claims) remains in a range that suggests the labor market remains tight,” said Thomas Simons, U.S. economist at Jefferies.
Data also showed a decline in U.S. job openings in April, with the number of available jobs per job-seeker reaching its lowest since June 2021.
This trend points to a rebalancing of the labor market toward pre-pandemic levels as the Federal Reserve’s interest rate hikes—amounting to roughly 525 basis points since March 2022—begin to slow demand in the overall economy.
Following the release of the jobless claims data, yields on U.S. Treasury securities and stocks remained largely unchanged.
This stability came a day after a rally in tech stocks drove the S&P 500 and Nasdaq Composite indices to all-time highs. The U.S. dollar also stayed flat against a basket of currencies.
Earlier on Thursday, data from outplacement firm Challenger, Gray & Christmas showed that U.S. employers announced the fewest job cuts last month since December.
In May, employers announced 63,816 cuts, a 1.5% decrease from April’s 64,789 cuts and a 20% decrease from the 80,089 cuts announced in May 2023. Year-to-date layoff announcements are 7.6% lower than in the first five months of 2023, indicating a slower pace of layoffs than the previous year.
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