Initial jobless claims fell by 5.2% last week to 200,000, a reflection of the continuing tight labor market as layoffs remain near a multidecade low, according to government data released Thursday.

We remain confident that initial jobless claims have reached bottom in April. We expect a slow upward climb of the series—a proxy for layoffs—given the level of strong labor demand in recent months, which has showed no signs of a sharp turn.

But that outlook might change depending on how aggressively the Federal Reserve raises interest rates in the second half of the year. The Fed is trying to engineer a soft landing to the overheated economy, but has still signaled that taming inflation is its top priority.

The decline in jobless claims helped to lower last week’s reading of the four-month moving average, yet the change was not significant, down to 206,500 from 207,000 in the prior week.

Before last week’s decline, initial jobless claims had increased for seven weeks in a row from the low point in early April.

The 13-week moving average—our preferred measure—also signaled an upward trend as new claims remained above that moving average for the fifth week in a row.

For the week ending May 21, continuing claims declined to 1.309 million from 1.346 million in the prior week. Data on continuing claims is released with a one-week lag.