The number of Americans filing new claims for unemployment benefits edged down last week as labor market conditions remained tight, though a slowdown is emerging amid high inflation and rising interest rates.
Despite the second straight weekly decline reported by the Labor Department on Thursday, claims are hovering near a five-month high. There have been job cuts in sectors like technology and housing amid fears of a recession. The Federal Reserve aggressively tightens monetary policy to quell price pressures.
The labor market’s best days are behind it,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
Unadjusted claims fell 3,255 to 202,844 last week. Illinois and Florida reported large declines in claims, which helped to offset a notable increase in Michigan. The overall labor market remains tight. There were 11.4 million job openings at the end of April, with nearly two openings for every unemployed person. But with rising reports of companies freezing hiring and withdrawing employment offers, job openings will trend lower.
Fed Chair Jerome Powell told lawmakers the labor market was “sort of unsustainably hot.
Reinforced by a survey from S&P Global on Thursday showing its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, dropped to 51.2 in June from a final reading of 53.6 in May.
Next week’s data on the so-called continuing claims, a proxy for hiring, will shed more light on June’s employment report. Employment is 822,000 below its pre-pandemic level, a gap economists expected will be closed in the coming month.
-Reuters.