US jobless claims rise modestly, labor market stays stable

New filings for unemployment benefits edged higher last week, but the increase was too small to suggest the labor market is losing its footing. Initial claims rose by 12,000 to a seasonally adjusted 211,000 in the week ended May 9, above the 205,000 economists had expected, yet still consistent with a labor market that remains largely intact.

The Labor Department also revised the prior week’s figure down by 1,000 to 199,000, while the four-week moving average increased by 750 to 203,750. On an unadjusted basis, actual initial claims totaled 190,571, up 10,258 from the previous week. Even with that weekly uptick, the broader trend still looks orderly rather than alarming.

The more telling signal came from continuing claims, which rose by 24,000 to 1.782 million in the week ended May 2. That measure, which captures the number of people still receiving unemployment aid, is watched closely for signs that laid-off workers are having a harder time finding new jobs. The insured unemployment rate also inched up to 1.2%, another reminder that the labor market is softening only marginally, not breaking down.

That reading fits with April’s employment report, which showed nonfarm payrolls rising by 115,000 and the unemployment rate holding at 4.3%. Job gains were concentrated in health care, transportation and warehousing, and retail trade, while federal government employment continued to decline. Taken together, the monthly and weekly data point to an economy still adding jobs at a decent pace, even if hiring is no longer as vigorous as it was earlier in the cycle.

The claims figures also arrive as inflation pressure from higher energy prices tied to the Iran war complicates the outlook for consumers and policymakers. For now, though, the labor market is doing enough to support the view that firms are reluctant to shed workers, and workers are still finding jobs at a pace consistent with a steady, if slower, expansion. The next signs to watch are whether continuing claims keep climbing and whether weakness spreads beyond a few sectors or remains contained.