U.S. Jobless Claims Pull Back Off Highest Level Since October 2021

First-time claims for U.S. unemployment benefits fell by more than expected in the week ended May 13th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims slid to 242,000, a decrease of 22,000 from the previous week’s unrevised level of 264,000. Economists had expected jobless claims to dip to 254,000.

The bigger than expected drop came after jobless claims reached their highest level since the week ended October 30, 2021 in the previous week.

“A drop in claims in Massachusetts accounted for most of the total decline; fraudulent claims in that state have been inflating figures in recent weeks,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

“Apart from Massachusetts, initial claims have stabilized in recent weeks after drifting higher in Q1, a reminder that labor market conditions are still relatively tight,” she added. “While we expect the Fed to leave rates steady at its June meeting, a resumption of rate hikes can’t be ruled out if labor market conditions don’t ease more significantly.”

The Labor Department said the less volatile four-week moving average also edged down to 244,250, a decrease of 1,000 from the previous week’s unrevised average of 245,250.

Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also slipped by 8,000 to 1.799 million in the week ended May 6th.

The four-week moving average of continuing claims also fell to 1,812,500, a decrease of 15,500 from the previous week’s revised average of 1,828,000.

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