WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, indicating that the labor market remains tight even as job growth is slowing.
Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 237,000 for the week ended July 8, the Labor Department said on Thursday. Economists polled by Reuters had forecast 250,000 claims for the latest week.
The data included last Tuesday’s Independence Day holiday, which could have caused some distortions. 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.
The Federal Reserve’s “Beige Book” report on Wednesday described demand for labor as having “remained healthy” in June with pockets of worker shortages in health care, transportation and hospitality as well as high-skilled positions. But it also noted that “some contacts reported that hiring was getting more targeted and selective.”
Nevertheless, the labor market is slowing, but not falling apart, as the impact of the U.S. central bank’s 500 basis points worth of interest rate increases since March 2022 spreads across the economy. Job growth in June was the smallest in 2-1/2 years.
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 number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 11,000 to a still-low 1.729 million during the week ending July 1, the claims report showed. The historically low level of claims suggests that some laid off workers are experiencing shorter spells of unemployment.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
