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US weekly unemployment claims hit highest level since August
The number of Americans filing for unemployment benefits jumped to its highest level in more than eight months last week, another indication that the U.S. labor market may be slowing.
Unemployment claims for the week ending May 4 rose by 22,000 to 231,000, up from 209,000 the previous week, the Labor Department reported Thursday. While last week’s claims were the highest since the last week of August 2023, it is still a relatively low number of layoffs and not a cause for concern.
The four-week claims average, which smooths out some of the weekly volatility, rose by 4,750 to 215,000.
Weekly unemployment claims are considered an indicator of the number of layoffs in the US in a given week and a sign of the direction the job market is heading. They have remained at historically low levels since the pandemic eliminated millions of jobs in the spring of 2020.
Last month, U.S. employers added just 175,000 jobs, the lowest number in six months and another sign that the job market may be softening. The unemployment rate rose from 3.8% to 3.9% and has now remained below 4% for 27 consecutive months, the longest such streak since the 1960s.
The government also recently reported 8.5 million job openings in March, the lowest number of vacancies in three years.
A moderation in the pace of hiring, along with a slowdown in wage growth, could give the Fed the data it seeks to finally issue an interest rate cut.
The Federal Reserve raised its benchmark interest rate 11 times starting in March 2022 in an attempt to quell the four-decade high inflation that took hold after the economy recovered from the COVID-19 recession in 2020. The Federal Reserve’s intention Fed was to loosen the labor market and slow wage growth, which could fuel inflation.
Many economists thought there was a possibility that rapid rate hikes could cause a recession, but jobs remained plentiful and the economy thrived thanks to strong spending by American consumers.
Although layoffs remain at low levels, companies have been announcing more job cuts recently, mainly in technology and media. Alphabet, Google’s parent company, Litter and eBay recently announced layoffs.
Outside of technology and media, Peloton, Stellantis, Nike, and Tesla have all recently announced job cuts.
In total, 1.79 million Americans received unemployment benefits during the week ending April 27. This represents an increase of 17 thousand compared to the previous week.