- Weekly jobless claims drop 1,000 to 222,000
- Four-week average of claims rises 2,750 to 225,500
- Continuing claims increase 21,000 to 1.74 million
The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to a further tightening in labor market conditions.
The robust labor market and firming inflation have cemented expectations the Federal Reserve will raise interest rates next week. Many economists believe the U.S. central bank will hike rates two more times after its June 12-13 policy meeting to prevent the economy from overheating.
The Fed lifted borrowing costs in March and forecast at least two more rate increases for this year.
Initial claims for state unemployment benefits decreased 1,000 to a seasonally adjusted 222,000 for the week ended June 2, the Labor Department said on Thursday. Claims data for the prior week was revised to show 2,000 more applications received than previously reported.
Economists polled by Reuters had forecast claims rising to 225,000 in the latest week.
Prices of U.S. Treasuries held at lower levels after the data while the dollar pared losses against a basket of currencies. U.S. stock index futures were trading mixed.
The labor market is considered to be close to or at full employment. Nonfarm payrolls increased by 223,000 jobs in May and the unemployment rate dropped to an 18-year low of 3.8 percent.
The jobless rate, which has declined by three-tenths of a percentage point this year, is now at a level where the Fed projected it would be by the end of this year.
Layoffs have remained very low amid signs of growing worker shortages across all sectors of the economy. Data on Tuesday showed there were a record 6.7 million job openings in April. The number of unemployed people per vacancy slipped to 0.9 from 1.0 in March.
The Labor Department said claims for Maine were estimated last week and that claims-taking procedures in Puerto Rico and the Virgin Islands had still not returned to normal after last year’s devastating hurricanes.
The four-week moving average of initial claims, viewed as a better measure of labor market trends as it irons out week-to-week volatility, rose 2,750 to 225,500 last week.
The claims report also showed the number of people receiving benefits after an initial week of aid increased 21,000 to 1.74 million in the week ended May 26. The four-week moving average of the so-called continuing claims dropped 13,250 to 1.73 million, the lowest level since December 1973.