Jobless Claims Fall as Labor Market Strength Continues to Defy Fed’s Anti-Inflation Push

The number of Americans applying for jobless benefits declined last week, suggesting that demand for labor in the U.S. remains high.

Initial applications for jobless claims, a proxy for layoffs, fell by 22,000 to 242,000 in the week that ended on May 6, the Labor Department said Thursday.

A spike in claims last week to 264,000 had sparked hopes that the labor market was finally cooling. This week’s figure was expected to come in around 255,000.

The Federal Reserve has said that it wants to cool demand for labor, fearing that demand outstripping supply will fuel inflation. Despite a year of rate hikes that have driven up interest rates at a record pace, unemployment has fallen to 3.4 percent, the lowest rate in decades.

The four-week moving average of claims, which smoothes out week-to-week volatility, fell by 1,000 to 244,250.

The total number of people claiming unemployment benefits fell by 8,000 to 1.8 million in the week ending April 29. That is a very low level by historical standards.

Economists increasingly expect that low levels of unemployment and strong demand for workers will keep consumer spending high, providing a critical boost to economic growth even as other parts of the economy have turned sluggish. Most economists still expect a recession over the next year but the start date of a downturn is being pushed further out into the future.