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US jobless claims increase modestly, but job recovery still intact

H.S. Borji
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US jobless claims increased slightly last week, but not enough to cause concern about the labour market recovery.

US jobless claims increased 4,000 to a seasonally adjusted 317,000 last week, the Labor Department reported today in Washington. The median estimate of economists called for new jobless applications fall to 310,000 in the week ended June 7.

The four-week moving average increased 4,750 to 315,250. The previous week’s average was revised up from 310,250 to 310,500.

The Labor Department indicated there were no special factors impacting last week’s claims.

Weekly jobless claims capture the number of people filing first-time claims for unemployment benefits. The indicator is used to measure ongoing developments in the US labour market.

After declining for five consecutive weeks, continuing jobless claims increased from 2.603 million to 2.614 million in the week ended May 31.

The slight increase in jobless claims wasn’t enough to alter the view the labour market was recovering at a steady pace. The Labor Department last week said US employers added 217,000 nonfarm payrolls in May, following a downwardly revised gain of 282,000 the prior month. Monthly employment growth has averaged 234,000 for the past three months.

The jobless rate held steady at 6.3 percent, a five-and-a-half-year low. The jobless rate fell from 6.7 percent to 6.3 percent in April.

The labour market reached a significant milestone in May, finally regaining all the jobs it lost following the 2007-08 financial crisis. The US jobless rate peaked at 10 percent in October 2009, up from a low of 4.4 percent in May 2007. The 2007-2009 recession destroyed 8.7 million US jobs.

Still, the labour market has a long way to go. The US population has grown nearly 7 percent since the financial crisis ended, according to ABC News, which means more job growth is needed.

One of the biggest challenges facing the US labour market is declining participation rates. The percentage of adults who either have a job or are actively seeking one remained at a 35-year low last month, official data showed.

Additionally, earnings growth remains disappointing. Average earnings advanced 2.1 percent annually in May, well below the long-run average of around 3.5 percent.

Month-on-month, average earnings were up 0.2 percent following no change in April.

In other news, US retail sales advanced 0.3 percent in May, half the rate expected by the consensus. Retail sales excluding automobiles edged up 0.1 percent, the Commerce Department said.

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