Claims for unemployment benefits are indicative of layoffs, and these levels show extraordinary job security.
The number of Americans claiming unemployment benefits rose to its highest level since August, but remains low by historical standards.
The Labor Department reported on Wednesday that 240,000 people applied for unemployment benefits last week, an increase of 17,000 from the previous week. The four-week moving average of claims, which smooths volatility from week to week, rose 5,500 to 226,750.
Claims for unemployment benefits are indicative of layoffs, and the current low levels show that American workers enjoy extraordinary job security.
But it can’t last.
To counteract inflation that hit a four-decade high earlier this year, the Federal Reserve has raised its reference rate six times since March. The housing market has shrunk under pressure from mortgage rates that have more than doubled compared to a year ago. And many economists expect the United States to slip into recession next year as higher borrowing costs slow down economic activity.
But the labor market has remained strong. Employers added 261,000 jobs last month and are creating an average of nearly 407,000 per month this year, on track to make 2022 the second-best year for hiring after 2021, according to government data dating back to 1940. There are nearly two job openings for every unemployed American. The unemployment rate is 3.7 percent, a few ticks above its half-century low.
The number of new weekly claims for unemployment benefits was extremely low at the start of the year, remaining below 200,000 for much of February, March and April. They then began to rise, reaching 261,000 in mid-July before falling back down.
“We expect layoffs to increase as demand falls in response to higher interest rates,” said Rubeela Farooqi, chief economist at High Frequency Economics in the US, in a research report. “However, the move is likely to be gradual as companies continue to struggle with labor shortages and will be reluctant to cut their workforce.”
The Labor Department said on Wednesday that 1.55 million people received unemployment assistance in the week ending Nov. 12, an increase of 48,000 from the previous week.