Applications for US unemployment benefits fell by the most since 2021 after fraudulent claims in at least one state boosted the numbers in previous weeks.

Initial unemployment claims fell by 22,000 to 242,000 in the week ended May 13, Labor Department data showed Thursday. On an unadjusted basis, claims decreased by the most in two months, to 215,810, largely due to a drop in Massachusetts.

Some economists have been wary about drawing strong conclusions from the data amid reports that fraudulent claims have been behind the recent upward trend in filings.

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Massachusetts accounted for nearly half of the nationwide increase in unadjusted claims in the week through May 6, and state officials said it was mainly due to fraud. Kentucky has also found an increase in the number of “imposter" claims, according to its website.

What Bloomberg Economics says...

"Jobless claims gave away most of the recent surge, which was driven by fraudulent activity in Massachusetts. Aside from that anomaly, the increase in unemployment claims suggests a gradual easing of labor-market conditions. This is consistent with a look across a broader range of indicators."

— Eliza Winger, economist

Continuing claims, which include people who have received unemployment benefits for a week or more and are a good indicator of how hard it is for people to find work after losing their jobs, edged down to 1.8 million in the week ended May 6.

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Looking through the swings due to fraudulent applications, the report points to a labor market that’s still holding firm despite growing concerns about the strength of the economy. Employers continue to add jobs at a steady pace and the unemployment rate fell back to a multi-decade low in April.

The data can be choppy from week to week. The four-week moving average of initial claims, which smooths out some of the volatility, fell to 244,250.