The latest sign of the economy's resilience could push the Fed to raise interest rates in July.
"The economy is currently displaying genuine signs of resilience," said Gregory Daco, chief economist at EY-Parthenon in New York. "This is leading many to rightly question whether the long-forecast recession is truly inevitable, or whether a soft landing of the economy is possible."
Claims could become volatile in July, when automakers typically shut down plants to retool for new models. But these temporary plant closures do not always happen around the same time, which could throw off the model that the government uses to strip out seasonal fluctuations from the data. Financial markets have almost fully priced in a 25 basis points rate hike at the Fed's July 25-26 policy meeting, according to the CME Group's FedWatch Tool.
Continuing claims covered the period during which the government surveyed households for June's unemployment rate. Continuing claims fell between the May and June survey periods. The unemployment rate was at 3.7% in May. The upward revision from the 1.3% pace reported last month reflected upgrades to consumer spending and exports. The economy grew at a 2.6% pace in the fourth quarter.Economists had expected first-quarter GDP growth would be raised slightly to a 1.4% pace.
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