US weekly jobless claims increase more than expected

The number of Americans filing new claims for unemployment benefits increased more than expected last week as the labor market steadily eases.

Initial claims for state unemployment benefits increased 22,000 to a seasonally adjusted 231,000 for the week ended May 4, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims in the latest week. Claims had been tucked in a 194,000-225,000 range for much of the year.

Some the rise last week was likely related to seasonal issues, with school spring breaks out of the way. The labor market is steadily rebalancing in the wake of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to dampen demand in the overall economy.

The economy added the fewest jobs in six months in April, while job openings dropped to a three-year low in March, the government reported last week.

Ebbing labor market momentum has put two rate cuts from the Fed this year back on the table. Financial markets expect the U.S. central bank to start its easing cycle in September. The Fed last week left its benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 17,000 to a seasonally adjusted 1.785 million during the week ending April 27, the claims report showed.