Declining U.S. jobless claims show a strong labor market, but at the same time, signs of an economic slowdown are beginning to show.

Initial jobless claims fall

The US Department of Labor reported on Thursday that the number of initial jobless claims decreased from 243,000 in the previous week to 238,000. Although the number of applicants has decreased, the average number of applicants over the past four weeks has increased to 232,700, the highest since September last year.

Still at historic lows

Initial jobless claims remain at historic lows, showing that most Americans enjoy high job security. Rubeela Farooqi, Chief Economist of High Frequency Economics, pointed out that although the overall layoff rate is still low, the number of applicants has gradually increased in recent weeks, and it is important to pay attention to whether there will be a more significant decrease in demand.

Unemployment benefits continue to increase

As of June 8th, nearly 1.83 million people have received unemployment benefits, an increase of 15,000 from the previous week and a seven week increase. This data shows that although the labor market is strong, an economic slowdown may have begun to manifest.

Signs of economic slowdown

Despite the resilience of the US economy and labor market in a high interest rate environment, with unemployment rates still as low as 4%, there have been increasing signs of economic slowdown recently. For example, the Ministry of Commerce's report on Tuesday showed that retail sales had almost no growth last month.

Federal Reserve monetary policy adjustment

The Fed raised interest rates 11 times in 2022 and 2023, raising the benchmark interest rate to the highest in 23 years to combat inflation. Although inflation has decreased from its peak of 9.1% in mid-2022, it is still higher than the 2% target set by the Fed. Last week, Fed policymakers announced a reduction in the expected number of interest rate cuts this year, and now only one is expected.