US Jobless Claims Post Biggest Back-to-Back Drop Since September

(Bloomberg) -- Initial applications for US unemployment benefits fell last week, remaining subdued as both demand for workers and layoffs ease.

First-time claims decreased by 8,000 to 215,000 in the week ended May 18 after a similar drop in the prior period, marking the biggest back-to-back decline since September, according to Labor Department data released Thursday. The median forecast in a Bloomberg survey of economists called for 220,000.

Continuing claims, a proxy for the number of people receiving unemployment benefits, were little changed at 1.79 million in the week ended May 11.

us jobless claims post biggest back-to-back drop since september

US Jobless Claims Post Back-to-Back Declines | The 4-week moving average rose to the highest since September

Job cuts have slowed recently, and over the past six months unemployment claims have been oscillating within a fairly narrow range of historically low levels. But there are indications that the labor market is cooling, including a slowdown in hiring by employers in the latest employment report.

Companies’ latest earnings calls contained fewer mentions of layoffs — but also of labor shortages. As concerns about labor shortages ease, so will the impulse to hoard workers.

Federal Reserve officials are looking for further weakening in demand as they try to tame inflation without triggering a surge in unemployment.

The week ended May 18 is the so-called reference week for the government’s May employment report — the period during which surveys are conducted to prepare the report.

What Bloomberg Economics Says...

“Jobless claims ticked lower in the reference week for May’s payroll survey, leaving their level just 3k higher than the April survey week. That suggests labor-market cooling remains a slow process — even as we have doubts about how well claims capture underlying labor-market conditions.”

“Companies’ latest earnings calls contained fewer mentions of layoffs — but also of labor shortages. As concerns about labor shortages ease, so will the impulse to hoard workers.”

— Eliza Winger, economist

The four-week moving average, which helps smooth short-term fluctuations in weekly claims figures, increased to 219,750, the highest since September, after a temporary jump during school break in New York earlier in the month.

Initial claims, before adjustment for seasonal influences, fell by about 5,700 to 192,000. California and Indiana saw the largest drops.

In the 20 years that preceded the Covid-19 pandemic, weekly initial applications averaged about 345,000, and continuing claims roughly 2.9 million.

--With assistance from Vince Golle.

(Adds economists’)

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