New claims for U.S. unemployment benefits showed a significant increase to a high over two months ago but remained at a level consistent with tightening labor market conditions and further wage increases that could keep inflation high for a while.
A report from the Department of Labor on Thursday also showed the number of Americans collecting state unemployment checks was the smallest in more than 52 years by the end of April. Economists said last week's increase in early claims may be due to data adjustment difficulties following the holiday season.
According to JPMorgan economist Daniel Silver, the latest level of early claims filings is still relatively low based on past data and continued claims filings continue to show a low flow through today’s report. Overall, it is believed that the labor market remains strong.
Preliminary claims for unemployment benefits increased by 19,000 to 200,000 seasonally adjusted for the week ended April 30, the highest reading since mid -February. Economists surveyed by Reuters had forecast 182,000 applications for the most recent week.
Claims at 200,000 are seen as data consistent with strong demand for workers. The number of people receiving benefits after the first week of assistance dropped 19,000 to 1.384 million in the week ended April 23. It is the lowest level for so -called continuous claims since January 1970.
On the other hand, compensation for American workers recorded its biggest increase in more than three decades in the first quarter, government data showed last week.
The Federal Reserve on Wednesday was determined to raise interest rates by half a percentage point, the biggest increase in 22 years and at the same time noted that the U.S. central bank. will begin reducing its bond holdings next month in the face of high inflation readings.
Claims, which have dropped from a record high of 6.137 million in early April 2020, will be closely monitored for signs of whether rising borrowing costs are constraining demand or not. The market expects that NFP data will increase by 391,000 jobs in April after rising by 431,000 in March based on a Reuters survey.
