US labor market remains strong, but Verizon worker strike to impact May nonfarm payroll growth

The total number of people in the US looking for benefits of unemployment declined to a seasonally adjusted 278,000 in the week ended 14 May, on par with consensus projections of 275,000. The reading matches with the survey week for the employment report of May and signifies a rise of 30,000 from the same period in the prior month.

According to the US Labor Department, the four-week moving average was 275,750, a rise of 7,500 from the unrevised average of 268,250 in the previous week. It stated that there are “no special factors impacting this week's initial claims”.

Meanwhile, continuing jobless claims in the week ended 7 May dropped 13,000 to 2.52 million, in line with strong labor markets. The four-week moving average was up from 2.139 million to 2.143 million. However, the insured jobless rate remained at 1.6%.

According to the US Labor Department, the increase in the number of people seeking unemployment benefits in New York last week was mainly due to layoffs in warehousing and transportation, accommodation and food service industries, and educational service.

“Given that the Verizon worker strike continued through the end of last week, we would expect an effect of -20k to -40k on May nonfarm payroll growth”, said Barclays in a research report.