U.S. weekly jobless claims fall; first-quarter economic contraction confirmed -Breaking
WASHINGTON (Reuters] – Last week’s decline in Americans filing claims for unemployment benefits was consistent with a labor force that is tight despite strong workers demand and rising interest rates.
The Labor Department reported that initial claims for state unemployment benefits fell by 8,000 to 210,000 in the week ending May 21. This decline partially unduly reversed some surges in initial claims for state unemployment benefits that had led to claims reaching their highest levels since January.
Reuters polled economists and predicted 215,000 applications in the week to date. Some blamed recent increases in applications on less generous seasonal variables in May (the model the government uses in order to eliminate seasonal fluctuations in the data) and the current week’s 220,000 applicants.
However, others believe that some retailers are laying off employees. Walmart (NYSE.) Inc last week reduced their full year earnings forecasts. This was in response to rising inflation.
Since March, the Federal Reserve raised its policy rate by 75 basis points. It is anticipated that the U.S. central banking will increase its overnight rate by half of a percentage point each meeting in June or July. It has led to sharp selling in the stock market as well the surge of Treasury yields, and dollar.
With 11.5million job opportunities at the close of March, layoffs will be rare. People can also easily get another job if they lose their job. The number of claims has fallen from 6.137 million, an all-time high in April 2020.
The minutes of Wednesday’s Fed May 3-4 Meeting published by the Fed on Wednesday show officials commenting that the “demand for labor continues to exceed available supply across many areas of the economy” and that business contacts continue to report problems in hiring or retaining employees. Many people expected that the labor market would remain tight, and wage pressures will stay high for a while.
Although wages are not at the same level as inflation, they help consumers continue to spend and support the economy.
On Thursday, the Commerce Department published a separate report that confirms the contraction of the economy in the first half of the year due to record trade deficits and slower inventory growth than last quarter.
In its second estimate of GDP, the government stated that gross domestic product declined at 1.5 percent annually last quarter. This was a revision to the April 1.4% rate of decline. In the fourth quarter, GDP grew by 6.9%.