US labour market continues to cool amid housing struggles

The number of Americans enrolling for unemployment benefits slowed for the first time last week. This highlights a continued trend of the job market cooling down.

This comes as the housing market struggles under high interest rates. Permit applications for future residential building projects fell to their lowest level in about four years.

Loosening the labour market has offset inflation pressures, and financial markets now anticipate one or more rate cuts this year despite the Fed's hawkish stance. The US Fed has maintained its benchmark interest rate since July of last year.

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But the Fed's decision is keeping the housing market under pressure. The policy has kept borrowing costs elevated for home purchases. Overall homebuilding starts fell 5.5 per cent last month to the lowest level since June 2020. This was led by a sharp drop in multi-family projects. Single-family housing, accounting for the bulk of homebuilding, also slumped 5.2 per cent. The overall sentiment among homebuilders also weakened this month.

This data came on a day when US stock markets touched record highs. This was boosted by strong gains in AI tech stocks, led by Nvidia. Investor optimism on an AI-led stock rally continues to power the S&P 500 & Nasdaq to new highs.

Meanwhile, Unemployment rose to 4 per cent in May for the first time since January 2022.