US Weekly Jobless Claims Unexpectedly Fall as Economy Gains Strength

New claims for U.S. unemployment benefits surprisingly decreased last week, indicating sustained labor market strength, data showed on Thursday, while first-quarter GDP was revised higher on better exports and consumer spending. 

The Labor Department said on Thursday that initial claims for state unemployment benefits fell by 26,000 to a seasonally adjusted 239,000 for the week ending June 25. Reuters polled economists predicted 265,000 new claims last week.

For the past three weeks, claims had been consistently above the 2021 October average. As the economy begins to feel the effects of the Federal Reserve’s sizable interest rate rises, the readings had indicated a pick-up in layoffs, in line with a surge in reported job cutbacks outside the technology industry.

Meanwhile, the Commerce Department revised up economic growth for the first quarter by 2% in its third estimate of first-quarter GDP on Thursday. This is a boost from the previous reported rate of 1.3%.

“The updated estimates primarily reflected upward revisions to exports and consumer spending,” the government agency explained.

 The US economy has been given a boost by consumer spending, allowing it to get off to a good start in 2023 despite financial sector turbulence and rising interest rates have dampened optimism.

However, as the US Federal Reserve has rapidly increased its benchmark lending rate to curb high inflation, economic growth has been slowing.