Jobless Claims Fall Amidst Tight Labor Market: Labor Department

The U.S. Department of Labor Building in Washington on March 26, 2020. (Alex Edelman/AFP via Getty Images)

The number of Americans filing for new unemployment benefit claims has decreased slightly, according to data from the U.S. Labor Department.

“In the week ending May 21, the advance figure for seasonally adjusted initial claims was 210,000, a decrease of 8,000 from the previous week’s unrevised level of 218,000. The 4-week moving average was 206,750, an increase of 7,250 from the previous week’s unrevised average of 199,500,” a May 26 press release by the department stated.

The 8,000 claims decrease in the week ending May 21 partially offset the 21,000 claims increase seen for the previous week ending May 14.

Initial claims continue to remain at historically low levels, suggesting a strong labor market. The more-than-expected fall in jobless claims was due to weekly volatility, economist Eliza Winger told Bloomberg.

Though the level of claims is low by historical standards, “modest layoffs” are potentially an indication of a slowing business environment, she added.

The decline in jobless claims comes as minutes from the Federal Reserve’s May 3–4 meeting showed that officials believe demand for labor is outstripping available supply across the country. Officials also discussed their business contacts reporting difficulties in hiring and retaining employees.

There were a record 11.5 million job openings by the end of March, according to Reuters.

“The labor market data are still signaling that demand for labor remains strong,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York, said to Reuters. “That should keep layoffs low for now.”

On an unadjusted basis, initial claims fell by 183,927 for the week ending May 21, which is 14.53 claims lower than the previous week.

States that saw the largest increase in initial claims for the week ending May 14 were Kentucky with an increase of 6,712, California with 1,968, Illinois with 1,742, Ohio with 1,189, and Florida with 629.

States where initial claims decreased the most were Michigan with 384, Georgia with 325, Colorado with 301, Arizona with 278, and the District of Columbia with 251.

The tightest labor markets in America at present are in Utah, Montana, and Nebraska, where there are over 3.3 job openings per jobless individual, according to Financial Times. But in states like California, Pennsylvania, and Connecticut, there are only 1.4 job openings per unemployed person.

Even though wages are rising due to labor tightness and demand from employers, workers are not getting the benefit of the situation due to high inflation.

Average hourly earnings of an American employee increased by 5.5 percent in April 2022 compared to the same month the previous year. However, the 12-month inflation for April came in at 8.3 percent, meaning that an average worker’s real wages, after accounting for inflation, fell by 2.8 percent in April.