The number of Americans filing applications for unemployment benefits rose more than expected last week, but there is still no sign of a significant pickup in layoffs even as economic growth has shifted into lower gear.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 227,000 for the week ended June 22, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.
Economists polled by Reuters had forecast claims rising to 220,000 in the latest week. The Labor Department said claims for California and Mississippi were estimated.
Claims could rise further in the coming weeks as auto manufacturers temporarily shut down assembly plants for summer retooling. Companies implement the plant closures at different times, which can throw off the model the government uses to remove seasonal fluctuations from the data.
Claims are being watched for signs of a rise in layoffs stemming from a recent escalation in trade tensions between the United States and China. Rising risks to economic growth from the trade war, and low inflation, resulted in the Federal Reserve last week signaling interest rate cuts as early as July.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,250 to 221,250 last week.
Despite the underlying strength in the labor market, the broader economy is slowing. Manufacturing is struggling, the trade deficit is widening again, consumer confidence is ebbing and the housing sector remains mired in a soft patch.
The Atlanta Fed is forecasting gross domestic product growth to rise at a 1.9% annualized rate in the April-June quarter. The economy grew at a 3.1% pace in the first quarter following a temporary boost from exports and an accumulation of inventory.
Thursday's claims report also showed the number of people receiving benefits after an initial week of aid increased 22,000 to 1.69 million for the week ended June 15. The four-week moving average of the so-called continuing claims gained 6,500 to 1.69 million.
The continuing claims data covered the week of the household survey, from which June's unemployment rate will be calculated. The four-week average of claims rose 13,000 between the May and June survey weeks, suggesting little change in the unemployment rate, which is hovering near a 50-year low of 3.6%.