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Economic Report: U.S. unemployment claims fall to 210,000 and signal labor market still strong

The numbers: New U.S. jobless claims fell by 8,000 last week to 210,000, signaling that layoffs remain extremely low and the economy is still expanding despite more headwinds.

Applications for unemployment benefits had risen to a four-month high of 218,000 in the prior week.  

Economists polled by the Wall Street Journal forecast initial jobless claims to total 215,000 in the seven days ended May 21. The figures are seasonally adjusted.

Applications for unemployment benefits fell to a 54-year low of 166,000 in March and have hovered near 200,000 since the beginning of the year, government figures show.

Big picture:  A smattering of companies have announced plans to cut back on hiring or even cull some jobs, but demand for labor is still quite strong and the unemployment rate sits near a half-century low.

Economists are watching new jobless claims closely, however, to see if they start to move higher.

The Federal Reserve plans to raise interest rates sharply this year to combat high inflation, a strategy that could slow the economy and soften the labor market. Layoffs usually start to rise steadily before a recession.

Key details: Raw, or unadjusted, jobless claims fell sharply in California, Illinois and Kentucky. California and Kentucky has largely been responsible for the increase in new unemployment filings two weeks ago.

Missouri was the only state to show an increase of 1,000 or more. New claims declined in 27 states and the District of Columbia.

The number of people already collecting unemployment benefits, meanwhile, rose by 35,000 to 1.35 million in the week ended May 14. It was the first increase in almost two months, but these so-called continuing claims are still at the lowest level since 1969.

Continuing claims are reported with a one-week lag.

Market reaction: The Dow Jones Industrial Average DJIA, +0.60% and S&P 500 SPX, +0.95% were set to open higher in Thursday trades.

The Dow rose on Wednesday after the Fed minutes from its early May meeting suggested the central bank might not raise interest rates quite as rapidly as Wall Street had expected.

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