US weekly jobless claims fall; labor market gradually easing

WASHINGTON, May 16 (Reuters) - The number of Americans filing new claims for unemployment benefits fell last week, pointing to underlying strength in the labor market.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 222,000 for the week ended May 11, the Labor Department said on Thursday. Economists polled by Reuters had forecast 220,000 claims in the latest week.

The decline reversed a portion of the jump in the prior week, which had pushed claims to the highest level in more than eight months. The increase was largely attributed to a surge in applications in New York related to school spring breaks.

Though the labor market remains healthy, it is steadily rebalancing in the wake of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to cool demand in the overall economy.

Easing labor market conditions and the resumption in inflation's downward trend have raised the odds of a rate cut in September. The U.S. central bank last month left its benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 13,000 to a seasonally adjusted 1.794 million during the week ending May 4, the claims report showed. (Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)