The number of Americans applying for unemployment benefits decreased by 10,000 last week to a total of 222,000 on a seasonally adjusted basis, reflecting a continued period of low layoffs across the country.
This decline follows an sharp spike to 232,000 the previous week, the highest level of layoffs in eight months. The surge was largely attributed to a temporary increase in claims in New York due to school spring break—a predictable fluctuation seen several times each year.
The latest data shows that claims in New York have returned to typical levels, with a drop of 9,442 to 13,854 filings, down from over 23,000 the week before.
Throughout this year, initial jobless claims have ranged between 194,000 and 232,000. Jobless claims are a proxy for layoffs, so the figures indicate that companies continue to hold on to workers.
The U.S. has not seen jobless claims persist at these low levels since the 1960s, when the draft was sending many young men to fight in a foreign war and the population was much smaller.
Analysts surveyed by Econoday had forecast 22o,000 new claims for the week ending May 4.
Prior to seasonal adjustment, claims came in at 196,275, a 6.3 percent decline from the prior week’s unadjusted claims. Some analysts look at unadjusted claims because they believe that post-pandemic changes in the economy have created problems with the seasonal adjustments. This was the seventh time in 19 weeks this year that unadjusted claims came in below 200,000.
Typically, initial jobless claims are volatile. This year, however, they have been extremely placid, with several weeks coming in at exactly 212,000 and other weeks very close to that figure. The four-week average of claims, which typically is used to smooth out week-to-week volatility and is seen as a better indicator of the trend in the labor market, was 217,500, up 2,000 from the prior week’s moving average.
Meanwhile, the number of people continuing to collect unemployment benefits rose by 13,000 to 1.79 million, according to government reports. These continuing claims are similar to pre-pandemic levels observed in 2019.
Many economists believe that as long as employment remains high and layoffs low, consumer spending is likely to sustain economic growth in the U.S. On the downside, robust consumer spending could also keep inflation running hotter than desired.
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