US Unemployment drops to lowest level since 1969
The jobs market in the US remained strong in May, with job growth above market estimates and an unexpected drop in first-time unemployment claims.
While there has been much talk about a pending recession as the Federal Reserve takes steps to tamp down high inflation, recent reports on the health of the economy show cooling but still going strong. This is good news for the White House as the American public becomes increasingly concerned about the rapid rate that prices are increasing.
On Thursday, the Labor Department released data on weekly unemployment claims, the most timely data on the economy’s health, which showed new claims unexpectedly fell last week. The following day a report from the US Bureau of Labor Statistics showed strong job growth continued in May.
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State jobless benefits rolls decline to lowest level since 1969
Two years after the covid-19 pandemic sent the US economy into a freefall, causing unemployment to spike to nearly 15 percent, the US has nearly returned to the employment highs of February 2020. The strong demand for workers has created a labor shortage with 11.4 million job openings across the economy, more than the number of unemployed people.
Thursday’s report saw initial applications for unemployment benefits, a general indicator of layoffs, falling by 11,000 to 200,000 for the week ending 28 May. Economists had predicted that applications would dip by just 1,000 last week. The four-week average, which evens out some of the weekly volatility, saw claims reduce to 200,000, a drop of 500 from the previous week.
Across the US, the number of Americans collecting jobless benefits after an initial week of aid ticked down by 34,000 for the week ending 21 May. At 1.309 million that was the lowest level since December 1969 for continuing claims.
“Despite the global challenges we face, America is on the move,” President Biden said in a statement on the unemployment claims data. “Since I took office, the number of Americans relying on unemployment benefits is now down 95%, and our economy has added 8.3 million jobs.”
Signs of recession not panning out yet
Policymakers at the Fed have changed tack, taking a hawkish stance on inflation, which many had though would be transitionary, with the first 50 basis points increase since 2000. It is expected that the central bank will make similar increases to the overnight rate at each of the next meetings this month and in July.
While the sudden bumping up of interest rates, along with other global concerns including a slowdown in China and the continuing Russian invasion of Ukraine, has pummeled Wall Street indexes, companies continue to hire workers in higher-than-expected numbers. The latest jobs report registered 390,000 new jobs created, well above the increase of 325,000 predicted.
The silver lining on the strong job growth was that it was lower than 400,000-plus jobs the economy has added each month for the past 12 consecutively. Part of Biden’s stated three-part plan to tackle inflation is to “transition from an historic jobs recovery to steady, stable economic growth.”