(Bloomberg) -- Recent data on applications for US unemployment benefits were revised substantially lower after one state detected a surge in fraud, suggesting the labor market isn’t softening as much as previously thought.

Initial unemployment claims in the two weeks through May 13 were revised down by a combined 50,000, Labor Department data showed Thursday. In the most recent week, claims increased by 4,000 to 229,000.

A report earlier Thursday showed Massachusetts downwardly revised three months’ worth of claims that the state said were largely due to fraud. That’s roughly 171,000 total fewer applications than previously reported, based on non-seasonally adjusted data.

The new data show the labor market isn’t softening nearly to the extent that some thought it was. The overall level of claims is still fairly low, indicating resilient demand for workers.

“Their volatility and revisions point more to a shaky system for collecting data than a reliable measure of labor market vitality,” Robert Frick, corporate economist at Navy Federal Credit Union, said in a note, adding that other metrics point to a “healthy” jobs market.

What Bloomberg Economics Says...

“Broader labor-market data continue to suggest conditions are gradually easing, and we expect that cooling to accelerate in the second half of the year.”

— Eliza Winger, economist

To read the full note, click here

On an unadjusted basis, nationwide claims ticked up to 202,044 last week, led by Connecticut and Texas.

The data can be choppy from week to week. The four-week moving average of initial claims, which smooths out some of the volatility, was unchanged at 231,750.

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 lower to 1.79 million in the week ended May 13.

The report precedes next week’s monthly employment figures, which are forecast to show hiring likely moderated in May and the unemployment rate ticked up.

Separate data Thursday showed the government’s two main measures of US economic activity diverged in the first quarter, with one gauge painting a picture of weakness. 

--With assistance from Jordan Yadoo.

(Adds graphic, Bloomberg Economics comment)

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