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Economic Report: Jobless claims climb 13,000 to 242,000 and show hints of U.S. labor-market softening

The numbers: The number of Americans who applied for unemployment benefits at the end of April rose by 13,000 to 242,000 and hinted at some softening in a muscular U.S. labor market.

New jobless claims increased from a revised 229,000 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 number of filings is at the highest level since late 2021.

Yet jobless claims are still quite low historically.

Key details: Twenty-seven of the 53 U.S. states and territories that report jobless claims showed a decrease in the week ended April 29. Twenty-six posted an increase.

New filings rose the most in Massachusetts. They fell by more than 9,000 in New York in a decline likely tied to school year calendar.

The number of people collecting unemployment benefits in the U.S. fell by 38,000 to 1.81 million in the week ending April 22.

The gradual increase in these so-called continuing claims suggests it’s taking longer for people who lose their jobs to find new ones.

Big picture: Wall Street is watching unemployment claims closely because it’s one of the first indicators to blink red when the U.S. is headed toward recession. The worry is that higher borrowing costs orchestrated by the Federal Reserve to tame high inflation could trigger a recession.

An increase recently in new filings reflects a wave of layoffs in a few industries such as high tech, but most industries have kept employment high. There’s still little sign of a sharp erosion in the economy, never mind widescale job losses.

Looking ahead: “The recent claims data shows that the labor market is softening, but only gradually to this point,” said Thomas Simons, U.S. economist at Jefferies.

See also: April jobs report may show U.S. created fewest jobs in more than two years

Market reaction: The Dow Jones Industrial Average DJIA, -1.17% and S&P 500 SPX, -0.77% were set to open lower in Thursday trades.

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