The number of US citizens filing for unemployment benefits dropped to 211,000 vs. 215,000 expected for the week ended May 18, according to the Labor Department. While the economy may be losing some momentum, the labor market continues to show signs of strength.
Key Takeaways
- Jobless claims came in at 211,000 last week, 1,000 fewer than the week before and 4,000 under the predicted figure.
- The US labor market remains robust amid turbulent global economic conditions.
- No states were estimated last week.
Initial jobless claims dropped 1,000 despite expectations of an increase. No states were estimated and the previous week’s data was unrevised, pointing to a stable reading. Claims were volatile throughout the month of April due to the difficulty of adjusting data for seasonal fluctuations such as spring breaks and the holidays of Passover and Easter.
The four-week moving average of initial claims, a more stable measure than the volatile weekly average, dropped 4,750 to 220,250 last week. The strong labor market is likely bolstering other elements of the economy now under pressure as the effects of a short boost from strong exports and Q1 inventory accumulation begin to fade.
Retail sales and production at factories fell in April, manufacturing brought mixed reports, and the housing market continues to show signs of weakness despite lower interest rates on 30-year fixed mortgages. The economy reportedly grew 3.2% in Q1 but is now lowing momentum, with Q1 growth aided by a major tax stimulus package in 2018 that is unlikely to be repeated again soon. Q2 growth estimates are now below 2%.
First Cut: Initial jobless claims little changed in May 18 week, underlying trend remains low. https://t.co/RX99z3VmTJ pic.twitter.com/lKqlZ5bz35
— Whetstone Analysis LLC (@AnalysisLlc) May 23, 2019
Strong Labor Market
The four-week average of claims rose 18,750 between April and May, pointing to a slowdown in employment growth after a major surge of 263,000 jobs last month. The unemployment rate is now at a 49-year low of 3.6%.
Thursday’s report shows that the number of people receiving benefits after an initial week of aid rose 12,000 to 1.68 million for the week ended May 11. The four-week moving average of this measure rose 5,500 to 1.67 million.
Market Reaction
Spot gold is now trading up 1.06% at $1,285.55/oz. A sharp spike and subsequent decline in price has coincided with the release of the Labor Department report on jobless claims, but the precious metal continues to trade within a tight range for the time being.
Gold Price Chart
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