Jobless claims drop to 237,000 and point to still-strong U.S. labor market

The number of Americans who applied for unemployment benefits last week fell by 12,000 to 237,000, indicating most companies are reluctant to fire workers even in a more uncertain economic environment.

New jobless claims declined from a revised 249,000 in the prior week, government data showed.

The decline could be tied in part to the July 4 holiday. Unemployed workers sometimes delay applying for benefits around a holiday.

Unemployment claims typically rise when the economy weakens and a recession approaches.

Claims have moved up this year from historic lows, but they still aren’t pointing to a big deterioration in a very tight labor market.

Businesses have struggled to hire employees given a shortage of labor and they don’t want to resort to layoffs unless the economy weakens a lot further.

 New jobless claim fell in 29 of the 53 states and territories that report these figures to the federal government.

The other 24 posted an increase, including a usually large one in New York.

The number of people collecting unemployment benefits in the U.S., meanwhile, rose by 11,000 to 1.73 million to mark the first increase in a month.

The downtrend in continuing claims in the past five months, however, suggests that laid-off workers are finding new jobs relatively quickly.

The economy has lost some steam since the Federal Reserve began to jack up interest rates last year, but it’s still growing and producing plenty of new jobs. Even better, inflation is slowing.

Yet inflation is still running far too high for the Fed, in part because of rising wages spawned by the worst labor shortage in decades.

The central bank is watching wages closely to determine whether it needs to keep raising interest rates — and risk triggering a recession.

“The claims data do not show significant evidence of a pickup in layoff activity, but job growth will slow as people become increasingly more difficult to find to fill open positions,” said Thomas Simons, U.S. economist at Jefferies.

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