Initial jobless claims inched up by 2,000 last week to 232,000, slightly below expectations, according to the Labor Department on Thursday.
The data pointed to more softening in the labor market based on our preferred metric of the long-term trend—the 13-week moving average.
But the upward trend in this average has slowed markedly since the beginning of May, moving up to 236,000 last week from 235,000 one week earlier.
As a leading indicator for layoffs and the overall labor market strength, new claims data is suggesting a much more resilient market than expected.
Continuing claims for the week ending May 20 also rose slightly, to 17.95 million from 17.89 million a week before.
While Thursday’s data won’t be a factor in the May employment report coming out on Friday, the claims data from previous weeks suggests another strong payroll number.
The most recent data from ADP on net job gains—also released on Thursday—showed a significant upside surprise, registering a 278,000 rise in May versus the market forecast of 170,000.
Most of the gains came from leisure and hospitality, which added 208,000 positions, and mining, which added 94,000.
Even though we predict another strong jobs report on Friday, the recent rhetoric from the Federal Reserve leads us to expect that the Fed will pause its rate hikes at its meeting in two weeks as it assesses the impact of a year of rate increases.
