By Jeffry Bartash, MarketWatch
The numbers: The number of people who applied for unemployments benefits in early June was flat, leaving new jobless claims near a post recession low and suggesting little deterioration in the strongest labor market in decades.
Initial jobless claims, a rough way to measure layoffs, was flat at 218,000, the government said Thursday. The prior week’s tally was revised up to 218,000 from 215,000, however.
Economists polled by MarketWatch estimated new claims would total a seasonally adjusted 215,000 in the seven days ended June 1.
The more stable monthly average of new claims fell by 2,500 to 215,000 and touched the lowest level since late April. The four-week average gives a more accurate read into labor-market conditions than the more volatile weekly number.
What happened: The rate of layoffs has clung near a half-century low even though the U.S. economy has softened. Companies are so worried about finding good workers in an era of low unemployment that they are reluctant to fire anyone even when business slows.
Consider the number of people already collecting unemployment benefits, known as continuing claims. Although they rose by 20,000 to 1.68 million, continuing claims sit near a 46-year low.
Big picture: The pace of hiring in the U.S. has tapered off since late last year, but the labor market remains exceedingly strong by virtually every measure. Layoffs and unemployment are extremely low, job openings are near a record high and wages and benefits are rising.
If key segments of the economy such as manufacturing weaken any further, however, the impressive gains in the labor market over the past decade could start to fade.
What they are saying?: “The labor market remains very tight, layoff activity is low, and there is no evidence in the economic data that suggests that these conditions will change any time soon,” said Thomas Simons, senior money market economist at Jefferies LLC. “We expect the current range of claims, around 210,000 to 225,000, to persist for a long time to come.”
Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.66% and S&P 500 /zigman2/quotes/210599714/realtime SPX +0.74% rose slightly in early Thursday trades. Stocks have risen for two straight sessions after Federal Reserve Chairman Jerome Powell indicated an openness to a cut in U.S. interest rates.
The mini-rally follows heavy losses in the past two weeks. The stock market has been battered by a flare up in trade tensions with China and now Mexico.
The 10-year Treasury yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.59% was little changed at 2.10%. Yields have fallen from a seven-year high of 3.23% amid growing worries about the economy as well as expectations that the Fed would cut interest rates this year.