The labor market showed resilience as hiring slowed down drastically in the month of May, this can be seen in the number of Americans filing for unemployment benefits that have fallen last week to near a 43-year low. As a result, the Federal Reserve Officials are feeling more confident that job growth will increase since jobless claims have decreased.
Janet Yellen, Fed Chair, told lawmakers on Tuesday that the U.S. central bank believed the slowdown in non-farm payroll gains was “transitory,” also highlighting that “several other timely indicators of labor market conditions still look favorable.”
Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan, claimed that “overall labor market conditions are not as bad as one might assume based on May’s non-farm payroll print alone.”
Initial claims for state unemployment benefits declined 18,000 to a quarterly adjustment of 259,000 for the week ended June 18, released the Labor Department on Thursday. This decrease was the largest since February and left claims not too far from a 43-year low touched in March. Claims have now been below 300,000, a hint associated with a strong job market, for 68 straight weeks, the longest streak as of 1973. The month-long moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, falling from 2,250 to 267,000 last week. U.S. financial market was barely moved by the report as investors anxiously awaited the results of the Brexit on European Union membership late on Thursday.
The claims report covered the survey periods for June’s non-farm payrolls. The month average of claims declined 8,750 between the May and June survey periods, pointing towards an improvement in job growth after payrolls increased only 38,000 in May – the lowest increase since September 2010. Labor market optimism is being pushed by near record high job openings, as well as the very low percentage of layoffs. Thursday’s claims report showed the number of people still receiving benefits after an initial week of aid fell 20,000 to 2.14 million in the week ended June 11. The month-long average of the so-called continuing claims dropped 4,500 to 2.15 million.