US unemployment claims fall 2,000 as labor market tightens

WASHINGTON Reuters - The number of Americans filing new claims for unemployment benefits went down last week as labor market conditions remained tight, though some slowing is emerging.

For the week ending June 18, initial claims for unemployment benefits fell by 2,000 to a seasonally adjusted 229,000, the Labor Department said on Thursday. The latest week's applications were predicted by economists polled by Reuters.

In March, claims have been treading water after they fell to more than a 53 year low of 166,000, amid signs of some cooling in the labor market. There have been reports of job cuts in the technology and housing sectors, with the latter experiencing a moderation of activity as mortgage rates surge in response to rising inflation expectations and aggressive interest rate hikes from the Federal ReserveFederal Reserve.

The labor market is tight. At the end of April, there were 11.4 million job openings, with nearly two openings for every unemployed person. Economists say claims would need to rise above 250,000 to bring labor demand and supply back into balance to tame wage inflation.

The policy rate was raised by the US central bank last week by three-quarters of a percentage point, its biggest hike since 1994. Since March, the Fed has increased its overnight interest rate by 150 basis points.

Its quest to dampen demand in the labor market and overall economy is fuelling fears of a recession next year. Fed Chair Jerome Powell told lawmakers on Wednesday that the central bank was not trying to engineer a recession to tame inflation, but was fully committed to bringing prices under control even if doing so risked an economic downturn.

Retail sales, housing and manufacturing data shows the economy is losing speed after recovering from the first quarter's slump, which was mostly driven by a record trade deficit.

Last week's claims data covered the period during which the government surveyed establishments for the nonfarm payrolls component of June's employment report. Claims rose moderately between the May and June survey periods.

In May, the economy added 390,000 jobs. The number of people receiving aid increased from 5,000 to 1.315 million during the week ending June 11 as a result of the initial week of aid, according to the claims report.

The data on the continuing claims will shed more light on June's employment report.