Fewer Americans applied for unemployment benefits last week, with layoffs remaining at historically low levels even as other data show the job market has softened. The Labor Department reported Thursday that US jobless claims for the week ending May 11 had fallen to 222,000, 10,000 from the prior week—but the drop wasn’t as big as in the two previous weeks, which amounted to a combined drop of 23,000 from the prior week. While the applications last week were the most since the final week of August 2023, it’s still relatively low.
The four-week average of claims, which tends to smooth out some of the week-to-week volatility, edged up by 2,500 to 217,750.
Weekly Unemployment or Jobless Claims
Weekly unemployment claims are seen as a proxy for layoffs in the United States and an indication of what direction the job market is moving. They have been running at historically low levels since millions of jobs were lost when the coronavirus pandemic slammed the country in March 2020.
U.S. employers added just 175,000 jobs for jobless people in April, the fewest in six months and a sign that the hot labor market may finally be cooling. The unemployment rate bumped back up to 3.9% from 3.8% and has now stayed below 4% for 27 months—a record since the ’60s.
This comes even as the government reported in March that vacancies for job openings had declined to 8.5 million, the lowest in three years.
This suggested a moderation in hiring and a slowdown in wage growth that could give the Fed the data it had been looking for in order to finally issue a cut to interest rates. A cooler reading on consumer inflation in April may also play into the Fed’s next rate decision.
Fed’s Rate Hikes Battle Inflation; Economy Stays Strong
The Federal Reserve has hiked its benchmark borrowing rate 11 times since March 2022 in its bid to tame four-decade-high inflation that gripped the economy after it bounced back from the recession of 2020 caused by the COVID-19 pandemic. The Fed is trying to chill the labor market while damping wage gains as much as possible as inflation occurs. Many economists believed rapid hikes could cause a recession, but strong consumer spending has kept jobs plentiful and the economy overall healthy.
The number of job cuts that companies have been announcing is certainly on the rise over the past few weeks, with most of them in technology and media firms. Most recently, Google parent Alphabet, Apple, and eBay joined the bandwagon by announcing layoffs.
Apart from tech and media, over just the last few days, firms including Walmart, Peloton, Stellantis, Nike, and Tesla have announced job cuts. In all, 1.79 million Americans were collecting jobless benefits in the week that ended May 4. That’s an increase of 13,000 from the prior week. Wana check some posts related to finance.
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