Q1 GDP Revised Up to 2%; Unemployment Falls

By Newsmax
Posted on 06/29/23 | News Source: Newsmax

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to continued labor market strength.

Initial claims for state unemployment benefits dropped 26,000 to a seasonally adjusted 239,000 for the week ended June 25, the Labor Department said on Thursday. Economists polled by Reuters had forecast 265,000 claims for the latest week.

In the prior three weeks, claims had hovered at elevated levels last seen in October 2021. The readings had suggested a pick up in layoffs, consistent with a rise in announced job cuts outside the technology sector as the economy starts to feel the impact of the Federal Reserve's hefty interest rate increases.

Recent policy changes in Minnesota making tens of thousands hourly paid school workers eligible for state unemployment benefits during the summer break also accounted for some of the increase in claims. Fraud in some states could also be an issue.

Claims, relative to the size of the labor market, are well below the 280,000 level that some economists say would signal a significant slowdown in job growth. Employment growth has averaged 314,000 jobs per month this year.

Job growth is being driven by the services sector, including the leisure and hospitality category, which is still catching up after businesses struggled to find workers over the last two years. Industries like healthcare and education also experienced accelerated retirements during the COVID-19 pandemic.