More Americans filed for jobless claims last week and while the labor market remains broadly healthy, there have are growing signs that it may finally be cooling. Applications for unemployment benefits rose by 13,000 to 231,000 for the week ending Nov. 11, the Labor Department reported Thursday. That’s the most in three months.
Quick Read
- Jobless claims in the U.S. increased last week, with applications for unemployment benefits rising by 13,000 to 231,000 for the week ending Nov. 11, the highest in three months.
- This rise in jobless claims is seen as an indicator of an increasing number of layoffs.
- The Federal Reserve has been implementing measures to slow down the economy and labor market for nearly two years to combat high inflation.
- Despite the Fed’s efforts, which included raising its benchmark rate 11 times since March 2022, the labor market remained strong, and companies had to pay more to hire employees.
- Recent trends show a potential cooling in the labor market, with 1.87 million people collecting unemployment benefits as of the week ending Nov. 4, an increase from the previous week and the highest in almost two years.
- Continuously rising continuing claims suggest that it may be getting harder for the unemployed to find work, indicating a looser labor market.
- U.S. hiring slowed in October with 150,000 jobs added, marking the third time in nearly three years monthly job gains were under 200,000, with all three instances occurring in the last five months.
- Economists believe that the labor market is cooling but not enough to consider rate cuts, with the Fed needing to see further slowdown in labor and wage growth.
- The Fed left the benchmark rate unchanged at its recent policy meeting but didn’t rule out another increase before the end of the year.
- Inflation showed signs of easing, with overall inflation not rising from September to October and a year-over-year rise of 3.2% in October.
- The four-week moving average of jobless claims rose by 7,750 to 220,250.
The Associated Press has the story:
Jobless claims applications rise as labor market shows signs of cooling
Newslooks- (AP)
More Americans filed for jobless claims last week and while the labor market remains broadly healthy, there have are growing signs that it may finally be cooling.
Applications for unemployment benefits rose by 13,000 to 231,000 for the week ending Nov. 11, the Labor Department reported Thursday. That’s the most in three months.
Jobless claim applications are seen as representative of the number of layoffs in a given week.
The Federal Reserve has been tapping the brakes on the economy and the labor market for nearly two years, trying to stem what was the highest inflation in four decades. The central bank raised its benchmark rate 11 times since March of 2022 as part of that effort.
Yet for months it seemed as though the aggressive actions from the Fed had little impact and companies have been forced to pay more to land employees.
Cracks, however, may be staring to show.
Overall, 1.87 million people were collecting unemployment benefits the week that ended Nov. 4, about 32,000 more than the previous week and the most in almost two years. It was the sixth straight week that continuing claims rose.
“Job growth remains strong, and businesses have yet to start reducing their workforce in a significant way,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “But the continuing claims data are pointing to some softening in labor demand, in line with what the Fed wants to see.”
Economists suggest that continuing claims are steadily rising because many of those who are already unemployed may now be having a harder time finding work, an indication that the labor market is looser than it’s been in the post-pandemic era.
U.S. employers slowed their hiring in October, adding a modest but decent 150,000 jobs. It’s only the third time in almost three years that monthly job gains have come in under 200,000. Yet all three of those instances have come in the past five months.
“The claims data are consistent with a job market that is cooling enough to keep rate hikes off the table, but too strong to make rate cuts a consideration any time soon,” said economist Nancy Vanden Houten of Oxford Economics. “The Fed is surely encouraged by recent inflation data but needs to see a further slowdown in the labor market and wage growth to be persuaded that inflation is on a sustainable path back to 2%.”
Fed officials opted to leave the benchmark rate alone at their most recent policy meeting. Another increase before the end of the year has not been ruled out, yet recent data showed that inflation is continuing to ebb, a priority for Fed Chair Jerome Powell.
Overall inflation didn’t rise from September to October, the first time that consumer prices collectively haven’t budged from one month to another in more than a year. Compared with a year earlier, prices rose 3.2% in October, the smallest such rise since June, though still above the Fed’s 2% inflation target.
The four-week moving average of jobless claim applications rose by 7,750 to 220,250.
