WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to persistent strength in the labor market.
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 228,000 for the week ended July 15, the Labor Department said on Thursday. Economists polled by Reuters had forecast 242,000 claims for the latest week.
Though the labor market remains tight, last week’s decline was likely exaggerated by difficulties adjusting the data for seasonal patterns. According to Wrightson ICAP Chief Economist Lou Crandall, unadjusted jobless claims typically rise during the second full week of July.
“However, the seasonal pattern is sensitive to exactly when the reporting week ends,” said Crandall. “This year’s seasonal factor lands squarely in the middle.”
Automakers also normally idle plants in July to retool for new models. But these temporary plant closures do not always happen around the same time, which could throw off the model that the government uses to strip out seasonal fluctuations from the data.
Claims, relative to the size of the labor market, are way below the 280,000 level that economists say would signal a significant slowdown in job growth.
The labor market remains tight as companies hoard workers after struggling to find labor during the COVID-19 pandemic, despite the economy slowing amid hefty interest rate increases from the Federal Reserve. The U.S. central bank has raised its policy rate by 500 basis points since March 2022.
The claims data covered the week during which the government surveyed businesses for the nonfarm payrolls component of July’s employment report. Claims fell during the June and July survey weeks. The economy added 209,000 jobs in June.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 33,000 to 1.754 million during the week ending July 8, the claims report showed.
At current levels, the so-called continuing claims are low by historical standards, indicating that some laid-off workers are quickly finding new work.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)
