The number of Americans filing for jobless claims last week rose to its highest level in a year-and-a-half, though the labor market remains healthy by historical standards.
Applications for unemployment benefits for the week ending May 6 rose by 22,000 to 264,000, the Labor Department reported today. That’s up from the previous week’s 242,000 and the highest since November of 2021. The weekly claims numbers are seen as representative of the number of U.S. layoffs.
The four-week moving average of claims, which evens out some of the weekly volatility, rose by 6,000 to 245,250.
For the week of April 29, the total number of Americans collecting unemployment benefits rose by 12,000 from the previous week to 1.81 million.
American workers are enjoying unusual job security despite rising interest rates, economic uncertainty and fears of a looming recession.
U.S. employers added a healthy 253,000 jobs in April, evidence of a labor market still showing surprising resilience. The unemployment rate dipped to 3.4%, matching a 54-year low.
However, while hiring was solid in April, it was much weaker in February and March than it had previously estimated. Job gains for those months was lowered by a combined 149,000 jobs, a possible sign that rising interest rates are starting to infect the labor market.
Last week, the Fed raised its benchmark interest rate another quarter point. One of the Fed’s goals in raising interest 10 times in the past 14 months is to cool the job market and stifle rising wages. Until very recently, there was very little evidence the central bank’s actions were working on the labor market.
The government also recently reported that U.S. job openings fell in March to the lowest level in nearly two years.
The Fed is hoping to achieve a soft landing — lowering growth just enough to bring inflation under control without causing a recession. Economists are skeptical, with many expecting the U.S. to enter a recession later this year.
Last week, the Commerce Department reported that U.S. economy slowed sharply from January through March as higher interest rates hammered the housing market and businesses reduced inventories.
There have been an increasing number of layoffs recently, mostly in the technology sector, where companies added jobs at a furious pace during the pandemic. IBM, Microsoft, Salesforce, Twitter, Lyft and DoorDash have all announced layoffs in recent months. Amazon and Facebook have each announced two sets of job cuts since November.
But it’s not just the tech sector that’s trimming staff. McDonald’s, Morgan Stanley and 3M also announced layoffs recently.