The number of Americans who filed for unemployment benefits dropped last week, showing the resilience of the labor market and giving the Federal Reserve the necessary flexibility to focus on rising inflation.
Initial claims for unemployment benefits at the state level decreased by 3,000 to 209,000 in seasonally adjusted data for the week ending May 16, the Labor Department reported on Thursday. Economists surveyed by Reuters had expected 210,000 claims for the previous week.
Although economists anticipate an increase in claims this summer due to a seasonal trend, the labor market remains in a wait-and-see phase. Financial markets expect the Federal Reserve to maintain its target interest rate in a range of 3.50% to 3.75% until next year.
The tensions between the United States, Israel, and Iran have disrupted maritime traffic in the Strait of Hormuz, driving up prices for oil and other commodities, including fertilizers, petrochemical products, and aluminum.
The minutes from the Federal Reserve’s monetary policy committee meeting held on April 28 and 29, released on Wednesday, revealed that concerns about inflation spurred by the conflict with Iran intensified last month. An increasing number of policymakers believe the Fed should prepare for a possible rate hike.
Officials generally expected labor market conditions to remain stable in the short term, according to the minutes, though most believed that the risks to the employment aspect of the Fed’s “dual mandate” leaned towards the downside.
The data on last week’s jobless claims covered the period when the government surveyed businesses to establish the nonfarm payroll component of the May employment report. Payrolls increased by 115,000 jobs in April, following a gain of 185,000 in March. The number of people receiving unemployment benefits after an initial week of assistance, an indicator of hiring, rose by 6,000 to 1.782 million in seasonally adjusted data for the week ending May 9, according to the report on jobless claims.
