Americans filing jobless claims at highest level in 8 months
The number of Americans applying for unemployment benefits last week rose to the highest level in more than eight months, indicating the hot labor market may be weakening.
Applications for jobless aid for the week ending July 16 rose by 7,000 to 251,000, up from the previous week's 244,000, the Labor Department reported Thursday. That's the most since mid-November last year.
First-time applications generally reflect layoffs. As the Federal Reserve raises interest rates to cool inflation, it will likely destabilize a historically tight labor market.
"The Fed's rate hikes — aimed at not only lowering inflation but also rebalancing supply and demand for workers — is bound to result in a softening in labor market conditions and a further rise in layoffs over coming months," Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a research note.
The total number of Americans collecting jobless benefits for the week ending July 9 rose by 51,000 from the previous week, to 1,384,000. That figure has been near 50-year lows for months, indicating that even as some employers are laying off workers, those workers are moving to new jobs relatively easily.
Earlier this month, the Labor Department reported that employers added 372,000 jobs in June, a surprisingly robust gain and similar to the pace of the previous two months. Economists had expected job growth to slow sharply last month given the broader signs of economic weakness.
Meanwhile, consumer prices are still soaring, up 9.1% in June compared with a year earlier, the biggest yearly increase since 1981, the government reported last week.
All of those figures paint a divergent picture of the post-pandemic economy: Inflation is hammering household budgets, forcing consumers to pull back on spending, and growth is weakening, heightening fears the economy could fall into recession.
In an effort to combat the worst inflation in more than four decades, the Federal Reserve raised rates by a half-point in May and another rare three-quarter point increase last month. Most economists expect the Federal Reserve to jack up its borrowing rate another half-to-three-quarters of a point when it meets later this month.
Though the labor market is still strong, there have been some high-profile layoffs announced recently by Tesla, Netflix, Carvana, Redfin and Coinbase.