The number of Americans filing for jobless benefits jumped to the
highest level in 10 months last week, another possible sign that the labor market is loosening under
the weight of high interest rates.
Unemployment benefit applications for the week ending June 8 rose by
13,000 to 242,000, up from 229,000 the week before, the Labor Department
reported Thursday 13 June. That’s significantly more than the 225,000 new
claims analysts were expecting and the most since August of 2023.
The four-week average of claims, which softens some of the week-to-week
volatility, rose to 227,000 an increase of 4,750 from the previous week and the
highest since September.
Initial jobless claims in Massachusetts rose to 4,830 from 4,506 the
prior week.
Weekly unemployment claims are seen as a stand-in for the number of U.S.
layoffs in a given week and a sign of where the job market is headed. They have
remained at historically low levels since millions of jobs vanished when the
COVID-19 pandemic hit the US in the spring of 2020.
Though this week’s number seems relatively high,
it’s still within a range that reflects a healthy labor market. However, sustained layoffs at this level could
have some influence on Federal Reserve officials, who keep close watch on the
labor market when considering interest rate decisions. The Federal Reserve
raised its benchmark borrowing rate 11 times beginning in March of 2022 in an
attempt to extinguish the four-decade high inflation that took hold after the
economy rebounded from the COVID-19 recession of 2020. The Fed’s intention was
to cool off a red-hot labor market and slow wage growth, which can fuel
inflation.
Many economists had expected the rapid rate hikes would trigger a
recession, but that’s been avoided so far thanks to strong consumer demand and
sturdier-than-expected labor market.
Though a report Wednesday showed that consumer inflation cooled a bit
last month, the Federal Reserve later that day left its benchmark lending rate
at a 23-year high. Fed Chair Jerome Powell said officials at the US central
bank need more evidence that price increase are on the way toward their 2
percent target. America’s employers
added a strong 272,000 jobs in May, accelerating from April and a sign that
companies are still confident enough in the economy to keep hiring despite
persistently high interest rates.
But last week’s report from the government included some signs of a
potential slowdown. The unemployment rate edged up for a second straight month,
to a still-low 4 percent, from 3.9 percent, ending a 27-month streak of
unemployment below 4 percent. That streak had matched the longest such run
since the late 1960s. The government also recently reported that job openings
fell to 8.1 million in April, the fewest vacancies since 2021.
Though layoffs remain relatively low, some
high-profile companies have been announcing more job cuts recently, mostly
across technology and media. Google parent company Alphabet, Apple, and eBay have all recently
announced layoffs.
Outside of tech and media, Walmart, Peloton, Stellantis,
Nike, and Tesla have recently announced job cuts.
In total, 1.82 million were collecting jobless benefits during the week
that ended June 1, an increase of 30,000 and the most since early this year.