Economic Report: U.S. unemployment claims drop to 200,000, as layoffs fall to lowest level on record


The numbers: New U.S. jobless claims fell by 11,000 last week to 200,000, reflecting the lowest layoffs on record and the strongest labor market in decades.

Economists polled by the Wall Street Journal forecast initial jobless claims to total 210,000 in the seven days ended May 28. The figures are seasonally adjusted.

Applications for unemployment benefits have fallen two weeks in a row after rising in early May to a four-month high.  

New filings slid to a 54-year low of 166,000 in March and have hovered near 200,000 since the beginning of the year, government figures show.

Big picture: Good help is in short supply amid the tightest labor market in decades, but there are signs of a slight softening.

Job openings have fallen from a record high, for example, and the Fed’s Beige Book said some companies have put in place hiring freezes as worries about a recession grow

Still, the rate of U.S. layoffs recently hit a record low and there’s little sign of businesses shedding jobs. Layoffs usually start to rise steadily before a recession.

Key details: Raw, or unadjusted, jobless claims fell the most in Kentucky, Pennsylvania, Georgia and Florida.

California and Mississippi were the only states to post sizable increases.

The number of people already collecting unemployment benefits, meanwhile, fell by 34,000 to 1.31 million in the week ended May 21. These so-called continuing claims are still at the lowest level since 1969.

Continuing claims are reported with a one-week lag.

Looking ahead: “With job openings still elevated and layoffs at a record low, we expect initial claims to remain near current levels even as demand for workers starts to ease,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in a note to clients.

Market reaction: The Dow Jones Industrial Average DJIA, -0.54% and S&P 500 SPX, -0.75% were set to open higher in Thursday trades.

The Dow has rallied over the past week on the possibility that the Fed might not raise interest rates quite as rapidly as Wall Street had expected.

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