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WRAPUP 1-U.S. weekly jobless near five-month high; unemployment rolls smallest since 1969

reuters.com · 06/09/2022 10:30
WRAPUP 1-U.S. weekly jobless near five-month high; unemployment rolls smallest since 1969

Weekly jobless claims increase 27,000 to 229,000

Unadjusted claims rise 1,008 to 184,604

Continuing claims unchanged at 1.306 million

By Lucia Mutikani

- The number of Americans filing new claims for unemployment benefits increased to the highest level in nearly five months last week, but that likely does not mark a material shift in labor market conditions, which remain very tight.

The report from the Labor Department on Thursday also showed unemployment rolls remained at a more than 52-year low at the end of May, underscoring the job market's strength. The Federal Reserve is poised to deliver another 50 basis points interest rate hike next Wednesday as it tries to cool demand, including for labor, in its fight against inflation.

There have been reports of companies freezing hiring or contemplating layoffs in anticipation of a recession next year, but overall demand for labor remains strong, with 11.4 million job openings at end of April. Economists largely shrugged off last week's larger than expected rise in claims as noise.

"Widespread difficulties in hiring workers are still discouraging businesses from laying off workers, but pockets of weakness have emerged among some tech startups as well as retailers which have felt the impact from a shift in consumer spending from goods to services," said Dante DeAntonio, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

Initial claims for state unemployment benefits rose 27,000 to a seasonally adjusted 229,000 for the week ended June 4, the highest since mid-January. Economists polled by Reuters had forecast 210,000 applications for the latest week.

The data included the Memorial Day holiday. The seasonal factors, the model that the government uses to strip out seasonal fluctuations from the data, had expected a 21,362 drop in unadjusted claims. There is, however, limited room for big decreases with unadjusted claims already at very low levels.

Unadjusted claims edged up 1,008 to 184,604 last week. There were notable increases in applications in Florida, Georgia and Pennsylvania, which offset declines in Mississippi and Michigan.

"We cannot be sure if the June 4 holiday week's jump in new jobless filings is real or not as the seasonal factor boosting not seasonally adjusted claims was a little aggressive," said Christopher Rupkey, chief economist at FWDBONDS in New York.

U.S. stocks opened lower. The dollar was steady against a basket of currencies. U.S. Treasury prices were mixed.


STUCK IN A TIGHT RANGE

Claims have been locked in a tight range since plunging to a more than a 53-year low of 166,000 in March. They have tumbled from a record high of 6.137 million in April 2020.

The government reported last Friday that nonfarm payrolls increased by 390,000 jobs in May, with the unemployment rate holding steady at 3.6% for a third straight month. Economists expect the jobless rate to decline in the coming months.

The claims report showed the number of people receiving benefits after an initial week of aid was unchanged at 1.306 million during the week ending May 28. The so-called continuing claims are at levels last seen at the end of 1969. The insured unemployment rate held at a record low 0.9% at the end of May.

"The insured unemployment rate suggests that the official unemployment rate will drop further, potentially closer to 3%," said Moody's Analytics' DeAntonio. "Job growth needs to cool to help the Fed pull off a soft landing."

The U.S. central bank is expected to raise its policy interest rate by another half a percentage point in July. The

Fed has hiked the overnight rate by 75 basis points since March.


(Reporting by Lucia Mutikani
Editing by Chizu Nomiyama)

((Lucia.Mutikani@thomsonreuters.com))