Jobless claims ease as housing starts weaken

U.S. initial jobless claims moved lower in the latest week, easing from the prior period even as the labor market continued to show more strain than it did earlier in the year. The reading was just above economists’ expectations, but it marked a decline from the prior week’s revised level.

Labor market signals remain mixed

Continuing claims, which lag initial filings by a week, rose to their highest level since late 2021. The back-to-back weekly readings above 1.8 million suggest that more workers are remaining on unemployment rolls for longer than they were during the stronger stretch seen in the fall and winter.

The latest claims data point to a labor market that is still functioning, but no longer displaying the same tight conditions that characterized much of the past year. The move higher in continuing claims matters because it indicates not just fresh layoffs, but difficulty finding new work after separation.

Housing data added another sign of weakness. May housing starts fell to their lowest level since June 2020, slipping below both market forecasts and the pace seen across most of the past several years.

Housing activity falls back

Single-family starts also declined in the month, underscoring broader softness in residential construction. The drop leaves housing activity well under the roughly 1.5 million annualized pace that had been common in recent years.

Taken together, the reports show a cooling economy in two important areas: employment and homebuilding. Investors were watching the data ahead of the market open, and futures remained positive even after the releases, though the gains appeared to narrow.

The figures do not point to a single dramatic shock, but they do reinforce the picture of slower momentum. For markets, that combination can complicate the outlook because weaker labor and housing trends often feed expectations for easier policy, while also raising concern about the underlying pace of growth.

This article is not investment advice and recommends no asset, level or direction; a single session's move is not evidence of a trend. For background see Economy, Budget Deficit, Central Bank, and for terms the finance glossary.