US jobless claims up, but still point to labour market strength

The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but remained at levels consistent with a strengthening labour market.

Initial claims for state unemployment benefits rose 7,000 to a seasonally adjusted 282,000 for the week ended May 23rd, the Labor Department said on Thursday.

Claims for the prior week were revised to show 1,000 more applications received than previously reported.

The dollar fell against a basket of currencies, while prices for US Treasury debt rose slightly.

Despite last week’s increase, claims stayed below 300,000, a threshold associated with a firming jobs market, for a 12th straight week, an unusually long stretch given a sluggish economic backdrop.

Outside the energy sector, which has suffered thousands of job losses because of a sharp decline in crude oil prices, layoffs remain subdued even as economic growth is struggling to rebound strongly after slumping at the start of the year.

April data on retail sales and industrial production suggest the economy was growing modestly early in the second quarter, but upbeat reports on housing, consumer confidence and business spending plans hinted at some acceleration as some drags on growth either fade or ease.

Economists polled by Reuters had forecast claims slipping to 270,000 last week. A Labor Department analyst said there was nothing unusual in the state-level data.

The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, increased 5,000 last week to 271,500.

Thursday’s claims report showed the number of people still receiving benefits after an initial week of aid rose 11,000 to 2.22 million in the week ended May 16. The so-called continuing claims covered the period during which the government surveyed households for May’s unemployment rate.

The four-week moving average of continuing claims declined 70,250 between the April and May survey periods, suggesting a dip in the jobless rate from a near seven-year low of 5.4 per cent last month.

Reuters