The first number of unemployed fell last week
Minneapolis (CNN) The number of first-time claims for weekly unemployment benefits fell last week to 242,000, down 22,000 from 264,000 the week before, according to data published Thursday by the Labor Department.
Continuing claims, which are filed by people who have received unemployment benefits for more than one week, fell to 1.799 million for the week ended May 6 from a revised 1.807 million the previous week.
Economists forecast the latest initial and continuing claims to land at a seasonally adjusted 254,000 and 1[ads1].818 million, respectively, according to consensus estimates at Refinitiv.
However, reports of fraudulent incidents in Massachusetts have muddled this important piece of economic data in recent weeks.
A week ago, the Labor Department’s report on unemployment insurance claims showed weekly first-time claims rose by 22,000 to the highest level since October 2021. However, a large portion of those new claims came from Massachusetts, where the state labor department said the reported gain was a reflection of an increase in fraudulent activity and not necessarily an increase in people applying for unemployment benefits.
“The Massachusetts Department of Unemployment Assistance is experiencing an increase in fraudulent attempts to access unemployment insurance benefits,” Matthew Kitsos, a spokesman for the state’s Executive Office of Labor and Workforce Development, said in a statement. “Attempts to defraud are increasing across the country, and Massachusetts is no exception. The increase in initial weekly unemployment claims does not reflect individuals applying for unemployment insurance, but rather attempts to defraud the system.”
Thursday’s report appears to balance this and recent increases in Massachusetts. Weekly claims attributed to Massachusetts fell by 14,042 on a non-seasonally adjusted basis, representing three-quarters of the decline of 18,605 claims.
“Except for Massachusetts, initial claims have stabilized in recent weeks after drifting higher [the first quarter]a reminder that labor market conditions remain relatively tight,” Nancy Vanden Houten, chief U.S. economist at Oxford Economics, wrote Thursday. “Although we expect that [Federal Reserve] to keep interest rates stable at the June meeting, a resumption of interest rate increases cannot be ruled out if labor market conditions do not ease more significantly.”
Continued claims showing sticky
In a note issued earlier this week titled “Something Fishy in Massachusetts,” Bank of America economists reported that during the week ended May 6, initial jobless claims rose by 6,420 on a non-seasonally adjusted basis, representing 45% of the total increase of 13,969 claims. The outsized influence of Massachusetts’ claims was an anomaly, BofA economists wrote, noting that the state’s total employment accounts for less than 3% of total U.S. employment, and its initial jobless claims are typically less than 3% of all weekly U.S. claims.
When excluding and recalculating applications in Massachusetts, initial claims have instead moved “sideways,” pointing to limited layoffs, economists Stephen Juneau and Michael Gapen wrote.
Continued claims, however, appeared to be less distorted by activity in Massachusetts, the economists wrote. They continue to serve as a reflection of “sticky” unemployment, they wrote.
“After re-evaluating the latest claims data, we are taking less of a signal from the initial claims data,” Juneau and Gapen wrote in the Tuesday note. “Although there are signs that unemployed workers are having a harder time finding a new job due to lower hiring rates, layoffs remain low and the labor market remains stable.”
Weekly jobless claims — which are highly volatile — remain below historical averages: In the decade before the pandemic, weekly claims averaged 311,000.