New applications for jobless benefits rose to the highest weekly level since November last week, according to data released Thursday by the Labor Department.
In the week ending Saturday, initial claims for unemployment insurance rose to 251,000 after seasonal adjustments, up by 7,000 from the previous week’s total of 244,000. The average weekly number of claims over the past four weeks rose by 4,500 to 240,500.
“The labor market is softening but the change is so far gradual. The U.S. economy is cooling but is probably not in recession in July,” said Bill Adams, chief economist for Comerica Bank, in a Thursday analysis.
“Between economic data and news reports, it’s clear that job losses are underway in the tech, mortgage finance, real estate brokerage, and big box retail sectors.”
While the increase in jobless claims was relatively small, it marked yet another week of rising layoffs amid deepening concerns about the strength of the economy. Weekly claims have jumped from a low of roughly 160,000 in mid-March by nearly 100,000 new applications per week.
The Federal Reserve’s recent series of interest rate hikes has taken a serious toll on industries sensitive to sharp increases in borrowing costs. Major companies in the technology, real estate, mortgage lending and retail sectors have begun to lay off workers and slow hiring as they face fewer sales and smaller profit margins.
The somewhat steady rise in jobless claims may be a sign that a historically strong U.S. job market is feeling pressure from high inflation, rising interest rates and poor consumer confidence.
“This level of claims remains historically low, and is consistent with a strong, non-recessionary job market. Nonetheless, claims have risen 51 percent from their nadir of 166,000 on March 19—a trend that warrants attention, especially as the Fed takes significant steps to tighten credit in an effort to slow inflation,” said Andrew Stettner, senior fellow at The Century Foundation, a left-leaning research nonprofit.
Jobless claims are still close to their levels before the coronavirus pandemic, when roughly 220,000 Americans applied to start new cycles of unemployment aid each week. Layoffs happen even when the economy is strong as seasonal jobs come and go and businesses rise and fall.
The job market has also flashed signs of resilience throughout the year. The U.S. added roughly 2.5 million jobs since the start of 2022 and the unemployment rate has held at 3.6 percent, just 0.1 percent above its level in February 2020, which was then a 50-year low.
Companies have also given workers ample opportunities to find new jobs with better compensation or career opportunities. There were roughly two open jobs for every unemployed American in May, according to Labor Department data, which was one of several factors potentially behind high inflation.
“Job postings are still extremely high. Some employers have probably started slow-walking hiring decisions, but others who are more confident about their business’s prospects are still eager to fill open slots,” Adams said.
“International factors like the Russia-Ukraine war, Chinese lockdowns, and a likely recession in Europe will play a big role in determining whether the U.S. enters a recession in the next year and a half.”