Filings for US unemployment benefits declined for a third consecutive week, signalling sustained firming in the labour market.
Jobless claims fell by 1,000 to 267,000 in the week ended May 28, a Labour Department report showed yesterday. The median forecast of economists surveyed by Bloomberg called for applications to edge up to 270,000.
Dismissals have been unusually subdued for more than a year as employers find little reason to trim staff amid a stable, if somewhat lacklustre, demand outlook. The monthly jobs report today is expected to show further labour-market improvement, which Federal Reserve officials will consider as they gauge whether to raise the benchmark interest rate at their June 14-15 meeting.
“It seems there’s a cautious optimism,” said Brett Ryan, US economist at Deutsche Bank Securities in New York. For the Fed, “it’s a dual mandate, but the labour market leads inflation. The direction of the labour market is a No 1 priority.”
Estimates in the Bloomberg survey ranged from 250,000 to 280,000 claims after an unrevised 268,000 in the previous week.
While there was nothing unusual in the data, initial applications were estimated for four US states and Puerto Rico, according to the Labour Department.
The four-week average of claims, a less-volatile measure than the weekly figure, decreased to 276,750 from 278,500 in the prior week. Filings have been below 300,000 for 65 consecutive weeks — the longest stretch since 1973 and a level economists say is typically consistent with a healthy labour market.
The number of people continuing to receive jobless benefits increased by 12,000 to 2.17mn in the week ended May 21. The unemployment rate among people eligible for benefits held at 1.6%, where it’s been since mid-February. These data are reported with a one-week lag.
Employers probably added 160,000 workers to payrolls in May for a second month, while the jobless rate dropped to 4.9% from 5%, according to Bloomberg survey medians before today’s Labour Department report. After averaging 208,000 in the first quarter, economists project job gains to slow to a 185,000 monthly pace by year-end. Investors are pricing in just over 20% probability that Fed officials will raise interest rates at their June meeting, while there’s a 53% likelihood of a rate hike by July, according to implied probabilities calculated by Bloomberg as of June 1.