NEWS

Official data from the U.S. Department of Labor revealed a slight drop in weekly jobless claims, indicating that layoff levels remain historically low, despite growing signs of a slowdown in the U.S. labor market.

According to the report, initial claims for unemployment benefits declined by 5,000 to a seasonally adjusted 245,000 for the week ending June 14, slightly below economists’ expectations of 246,000.

However, the four-week moving average – a more stable measure of labor market trends – rose to 245,500 claims, marking the highest level since August 2023.

Continuing Claims Drop Below 2 Million

The number of continuing claims (those receiving ongoing unemployment benefits) fell to 1.95 million for the week ending June 7, suggesting some workers are either finding new jobs or reaching the end of their benefit period.

Jobless Claims Remain Within Healthy Range Despite Economic Pressures

Since the U.S. economy rebounded from the COVID-19 recession, weekly unemployment claims have generally stayed between 200,000 and 250,000 — a range widely viewed by economists as a sign of a healthy labor market.

Yet, claims have recently hovered near the upper end of this range, signaling a gradual softening in hiring activity. So far in 2025, average monthly job gains have stood at 124,000, a solid figure but significantly below the 2023 average of 168,000, and far behind the 400,000 monthly average seen during the post-pandemic hiring surge of 2021–2022.

Fed Rate Hikes and Trump-Era Trade Policies Weigh on Growth

The current labor market slowdown is attributed to two major factors:

The Federal Reserve’s aggressive monetary tightening, with 11 consecutive interest rate hikes during 2022 and 2023 to combat inflation.

The lingering effects of former President Donald Trump’s trade policies, including a 10% tariff on most imported goods, which disrupted global supply chains and dampened consumer sentiment amid fears of rising prices.

Although the Fed cut rates three times last year as inflation eased, the risk of renewed inflation due to Trump’s tariff revival has led the central bank to adopt a more cautious stance in 2025.

As the Fed concludes its two-day policy meeting later today, markets widely expect interest rates to remain unchanged, with focus shifting to inflation trends and labor market performance.

Market Reaction: Stocks Edge Higher, Dollar Dips

U.S. financial markets showed modest gains in response to the labor data:

S&P 500 futures rose by 0.2%.

Nasdaq 100 futures also gained 0.2%.

Dow Jones futures increased by 46 points, or 0.1%.

Meanwhile, in the precious metals market:

Gold futures slipped 0.02% to $3,405/oz.

Spot gold prices dipped 0.05% to $3,386/oz.

On the currency front, the U.S. Dollar Index fell by 0.2%, reflecting investor caution ahead of the Fed's interest rate decision.