The numbers: The number of Americans who applied for unemployment benefits in mid-May sank to 242,000, aided by efforts in Massachusetts to counter a recent spike in fraudulent claims.
New jobless claims declined from 264,000 in the prior week, the Labor Department said Thursday. The figures are seasonally adjusted.
The number of people applying for unemployment benefits is one of the best barometers of whether the economy is getting better or worse.
New jobless claims have risen from fewer than 200,000 in January in a sign the labor market is cooling. The problems in Massachusetts don’t alter the underlying trend.
Key details: Thirty-five of the 53 U.S. states and territories that report jobless claims showed a decrease in the week ended May 15. Eighteen posted an increase.
The biggest drop took place in Massachusetts, which is battling a surge in fraudulent applications. New filings in the state sank by 14,042 to 20,901, based on actual or unadjusted data.
Just one week earlier, a spike in Massachusetts filings pushed new U.S. jobless claims to the high level since late 2021.
New unemployment applications in the state still appear to be unusually high, however. Massachusetts reported the the second highest number of new claims after California, another state that has suffered from excessive fraud.
New claims in Massachusetts easily surpassed Texas and New York, two states with a much higher number of workers.
By contrast, Massachusetts is 13th among the states in the total number of employees.
The number of people collecting unemployment benefits in the U.S., meanwhile, dipped by 8,000 to 1.8 million in the week ending May 6.
The gradual increase in these so-called continuing claims over the past year suggests it’s taking longer for people who lose their jobs to find new ones.
Big picture: Jobless claims are slowly creeping higher from historically low levels, but not enough to signal that a recession is on the horizon. The economy has slowed largely due to sharply higher interest rates orchestrated by the Federal Reserve to subdue high U.S. inflation.
Wall Street is watching unemployment claims closely because it’s one of the first indicators to blink red when the economy is headed for trouble.
Looking ahead: “Businesses have been extremely reticent to let go of workers that they struggled to find over the last two years, but it is increasingly clear that they will not be able to hold on to everyone indefinitely,” said U.S. economist Thomas Simons of Jefferies.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were fell in Thursday trades.
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