The number of Americans filing new claims for unemployment benefits edged down last week as labor market conditions remained tight, though some slowing is emerging.
Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 229,000 for the week ended June 18, the Labor Department said on Thursday. Economists polled by Reuters had forecast 227,000 applications for the latest week.
Claims have been treading water since tumbling to more than a 53-year low of 166,000 in March amid signs of some cooling in the labor market. There have been reports of job cuts mostly in the technology and housing sectors, with the latter experiencing a moderation in activity as mortgage rates surge in response to rising inflation expectations and aggressive interest rate hikes from the Federal Reserve.
The overall labor market, however, remains tight. There were 11.4 million job openings at the end of April, with nearly two openings for every unemployed person. Economists say claims would need to rise above 250,000 to help bring labor demand and supply back into balance to tame wage inflation.
The U.S. central bank last week raised its policy rate by three-quarters of a percentage point, its biggest hike since 1994. The Fed has increased its benchmark overnight interest rate by 150 basis points since March.
Its quest to dampen demand in the labor market and overall economy is fanning fears of a recession next year. Fed Chair Jerome Powell told lawmakers on Wednesday the central bank was not trying to engineer a recession to tame inflation, but was fully committed to bringing prices under control even if doing so risked an economic downturn.
Recent retail sales, housing and manufacturing data suggest the economy is already losing speed after appearing to have rebounded from the first quarter’s slump, which was mostly driven by a record trade deficit.
Last week’s claims data covered the period during which the government surveyed establishments for the nonfarm payrolls component of June’s employment report. Claims rose 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 an initial week of aid increased 5,000 to 1.315 million during the week ending June 11.
Next week’s data on the so-called continuing claims will shed more light on June’s employment report.