Weekly US jobless claims rise, first quarter labor costs revised lower

(Reuters) – The number of Americans filing new claims for jobless benefits rose last week and unit labor costs rose less than previously thought in the first quarter, showing the labor market is cooling. , but not enough to ease the Federal Reserve’s reluctance to begin tapering. Interest rates.

Initial claims for state jobless benefits rose by 8,000 to a seasonally adjusted 229,000 for the week ending June 1, the Labor Department said Thursday. Economists polled by Reuters had forecast 220,000 claims in the past week.

The labor market is steadily rebalancing toward pre-pandemic levels after the Fed raised interest rates by roughly 525 basis points from March 2022 to slow demand in the overall economy.

So-called continuing claims that track those collecting benefits beyond the first week rose by 2,000 to a seasonally adjusted 1.792 million in the week ending May 25.

“The level (of weekly jobless claims) remains in a range that suggests the labor market remains tight,” said Thomas Simons, US economist at Jefferies. “Ongoing claims are still very low by any historical standard, and we still see the data as supporting the notion that people who lose a job are able to find a new one with relative ease.”

Data earlier this week showed that US job openings in April fell more than expected and the number of job openings for job seekers hit the lowest level since June 2021.

Earlier on Thursday, US employers announced the fewest job cuts last month since December, and layoff announcements so far in 2024 are lagging behind last year’s pace, according to data from employment firm Challenger , Gray and Christmas.

Employers announced 63,816 layoffs in May, down 1.5% from the 64,789 layoffs announced in April and down about 20% from the 80,089 layoffs announced a year earlier. Year-to-date layoff announcements are 7.6% lower than in the first five months of 2023.

PRODUCTIVITY, LABOR COSTS REVISED LOWER

U.S. worker productivity rose slightly less than previously estimated in the first quarter but beat market expectations and unit labor costs rose less than initially thought, data from the Department of Labor.

Nonfarm productivity, which measures output per hour per worker, rose at an annual rate of 0.2% in the first quarter, revised down from an initial estimate of 0.3% a month earlier. Economists polled by Reuters had estimated a revision of up to 0.1%.

Unit labor costs rose at an annual rate of 4.0%, down from the first estimate of 4.7%. Economists had predicted that labor costs would be revised up to 4.9%.

The story continues

Productivity accelerated and labor costs declined through most of 2023, ending at 3.5% and unchanged, respectively, in the fourth quarter. At the time, this was seen as one of the arguments favoring a Fed rate cut in 2024, as it was hoped that improved worker efficiency would lower inflation.

The near-stagnation of productivity in the first quarter did not further that cause, although some economists had warned after the initial BLS estimate was released last month that the data had been affected by a seasonal quirk and the improving productivity trend could continue still.

Elsewhere, the Commerce Department reported that the US trade deficit widened in April as a rise in imports outpaced a slight increase in exports, which is likely to dampen economic growth in the second quarter.

The trade deficit widened 8.7% to $74.6 billion, the Commerce Department’s Bureau of Economic Analysis said Thursday, the largest since October 2022. Data for March was revised to show the trade gap narrowed slightly to 68.6 billion instead of the previously reported $69.4 billion.

(Reporting by Lindsay Dunsmuir and Dan Burns; Editing by Chizu Nomiyama and Paul Simao)