New applications for unemployment benefits had shot up in late May to a five-week high, but the increase was largely due to the timing of the Memorial Day holiday and not a reflection of any underlying shift in the health of a vibrant USA labor market.
The Labor Department said on Thursday first-time claims for jobless benefits fell by 10,000 to 245,000 for the week ending June 3. For the current week of the year, this is more than 100K below the average going back to 2000 and the lowest for this specific week since 1974.
The four-week moving average of initial claims, which evens out weekly volatility, increased by 2,250 last week to 242,000.
Low layoffs and record high job openings suggest a deceleration in job growth in May was likely because companies could not find suitable workers.
Continuing claims declined slightly to 1.917mn for the week ending May 27th from a revised 1.919mn the previous week and the reading has been below 2.00mn for eight successive weeks.
"Labor market supply constraints are expected to bite into job creation but should also help to keep a lid on jobless claims as employers focus on retaining talent, so long as the economy continues to chug along", said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.
Unemployment claims are a proxy for layoffs. There is nothing in the data to discourage a Fed move to raise interest rates next week. To get there, the four-week moving average would need to drop down to 235.5K from the current level of 242K.