US weekly jobless claims fall amid labor market resilience
WASHINGTON - The number of Americans filing claims for unemployment benefits fell last week, pointing to labor market resilience and giving the Federal Reserve room to focus on rising inflation.
Initial claims for state unemployment benefits slipped 3,000 to a seasonally adjusted 209,000 for the week ended May 16, the Labor Department said on Thursday. Economists polled by Reuters had forecast 210,000 claims for the latest week.
Though economists expect claims to rise in the summer because of a seasonal quirk, the labor market remains in a holding pattern. Financial markets expect the U.S. central bank to keep its benchmark overnight interest rate in the 3.50%-3.75% range into next year.
Minutes of the central bank’s April 28-29 meeting published on Wednesday showed concerns about inflation being stoked by the Iran war intensified last month, with a growing number of policymakers saying the Fed should lay the groundwork for a possible rate hike.
Policymakers “generally expected labor market conditions to remain stable in the near term,” the minutes showed, though most judged “that risks to the employment side” of the Fed’s “dual mandate were tilted to the downside.”
Last week’s claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of May’s employment report. Payrolls increased by 115,000 jobs in April after rising by 185,000 in March.
The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 6,000 to a seasonally adjusted 1.782 million during the week ended May 9, the claims report showed.
Single-family housing starts tumble in April
U.S. single-family homebuilding dropped sharply in April and permits for future construction fell, suggesting the housing market could remain subdued for a while as the Iran war drives up mortgage rates and an oversupply of new houses persists.
Single-family housing starts, which account for the bulk of homebuilding, tumbled 9.0% to a seasonally adjusted annual rate of 930,000 units, the Commerce Department’s Census Bureau said on Thursday. Single-family homebuilding fell in all four regions. It declined 2.4% year-on-year in April.
The U.S.-Israel war with Iran has raised oil prices and is fanning inflation, driving up U.S. Treasury yields. Mortgage rates track the 10-year Treasury note, whose yield is hovering near a 1-1/2 year high.
The popular 30-year fixed mortgage rate averaged 6.36% last week, data from mortgage finance agency Freddie Mac showed. It averaged 5.98% at the end of February, when the war started, as Freddie Mac and Fannie Mae expanded purchases of mortgage-backed securities.
Permits for future construction of single-family homes dropped 2.6% last month to a rate of 872,000 units. They decreased 5.5% year-on-year in April.
Homebuilding is also being weighed down by tariffs on imported goods, including lumber and vanity cabinets, as well as higher land, labor and construction costs. Residential investment, which includes home building, has contracted for five straight quarters.
A National Association of Home Builders survey this week showed homebuilder sentiment remaining depressed in May.
Though new housing inventory has declined from levels last seen in late 2007, it remains elevated.
Starts for housing projects with 5 units or more, a very volatile segment, jumped 14.3% to a rate of 529,000 units in April. Multi-family housing starts shot up 23.3% year-on-year. Overall, housing starts fell 2.8% to a pace of 1.465 million units. They increased 4.6% year-on-year in April.
Building permits for multi-family housing projects surged 22.7% to a rate of 514,000 units in April. Overall, building permits increased 5.8% to a rate of 1.442 million units last month. They fell 0.2% year-on-year in April.
Manufacturing activity rises to four-year high in May
U.S. manufacturing activity strengthened in May, scaling the highest level in four years, as businesses boosted inventories to guard against potential shortages and rising prices related to the war with Iran.
S&P Global said its flash manufacturing PMI increased to 55.3 this month, the highest reading since May 2022, from 54.5 in April. A reading above 50 indicates growth in manufacturing, which accounts for 9.4% of the economy. Economists polled by Reuters had forecast the manufacturing PMI easing to 53.8.
The nearly three-month-long U.S.-Israeli conflict with Iran has disrupted shipping in the Strait of Hormuz, raising energy prices, as well as straining global supply chains and causing shortages of a wide range of goods, including fertilizers, aluminum and consumer products.
The rise offset a moderation in the flash services PMI to 50.9 from 51.0 in April. That left the S&P Global’s flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, unchanged at 51.7.
S&P Global Market Intelligence chief business economist Chris Williamson said the reading indicated “that the economy will struggle to manage annualized GDP growth of much more than 1% in the second quarter.”
S&P Global said that though new order growth at factories slowed, input inventories increased to an 11-month high, attributed to “the building of safety stocks amid price and supply worries.”
Its measure of supplier delivery times lengthened to levels last seen in August 2022. Before the war, suppliers were being constrained by President Donald Trump’s sweeping tariffs.
With supplier performance deteriorating, a measure of prices paid by factories for inputs jumped to 79.5, the highest reading since June 2022, from 68.4 in April. Manufacturers also passed on the higher costs to consumers. The survey’s gauge of output prices rose to 63.3, the highest level since September 2022, from 61.7 in April.
Its overall measure of prices paid by businesses for inputs increased to 64.0, the highest reading since November 2022, from 61.3 in April. That suggests a further acceleration in inflation is coming. Producer inflation increased by the most in four years in April, while consumer prices posted their biggest year-on-year gain since May 2023. But higher prices could weigh on demand and undercut economic growth.
“On average, over the past three months, order book growth has slowed to its weakest for two years, and a boost from precautionary stock building due to concerns over further price hikes and supply delays will not last forever,” said Williamson.
The survey’s gauge of manufacturing employment rebounded this month, but the services sector employment contracted. A measure of overall private-sector employment fell to a 21-month low.
Copyright Reuters or USA Today Network via Reuters Connect.
This story was originally published May 21, 2026 at 10:27 AM.