U.S. jobless claims drop to 242,000

Investing.com -- The number of Americans filing for unemployment insurance dropped by more than projected last week after a steep slide in claims in Massachusetts.

Initial jobless claims for the week ended on May 13 dipped to 242,000, below economists' estimates of 254,000.

The figure was also down from the year-and-a-half high of 264,000 posted in the prior week, a sharp uptick that was boosted by a spike in filings in Massachusetts that the state said was linked to "fraudulent" activities. 

Meanwhile, the four-week moving average, which aims to account for volatility in the weekly number, edged down slightly to 244,250.

Economists have said that claims in the range of 270,000 to 300,000 could be a sign of cracks beginning to appear in the labor market. The Federal Reserve has made cooling job demand a key pillar of its recent campaign of interest rate hikes aimed at corralling inflation. 

The Fed raised borrowing costs by 25 basis points at its most recent policy meeting, but expectations remain that the U.S. central bank may push pause on its tightening cycle at its next gathering in June.