The number of U.S. potential workers applying for unemployment benefits rose to 240,000. This is the highest number of unemployment claims since August 2021. However, the unemployment claim numbers for the week is still well below historic trend.
More applications than expectations
The U.S. Labor Department published unemployment claims data on Wednesday. The data showed that the unemployment claims rose to 240,000 for the week. Previously, the unemployment claims stood at 223,000 during the past week. Surprisingly, the data came out to be worse than the expectations. According to expectation, jobless claims were supposed to remain at 225,000. Similarly, the average for last four weeks rose by 5,500 a week. Currently, the four week moving average stands at 226,750.
Positive job growth during last year
U.S. job markets went through strange times during the last couple of years. In April 2020, the U.S. employers shed millions of jobs amid lockdown and pandemic fears. However, the situation turned around in 2021 when there were more than 1 million vacant jobs than the potential workers applying for them. Therefore, the employees enjoyed leverage over the employers. They were switching jobs at will. Hence, the employers found it tough to retain and attract workers. However, in recent times the situation has changed and many companies are laying off workers in wake of rising inflation and recession fears. In addition, the Federal Reserve has raised the interest rate repeatedly in recent months amid rising inflation.
Unemployment claims still below historic trends
Importantly, the applications for unemployment benefits stood extremely low during this year. The number was below 200,000 during February, March and April this year. The current unemployment claims are also low compared to past years. Hence, it is depicting that the employees are enjoying job security with their employers. However, the situation may not last for long.
“We expect layoffs to rise as demand softens in response to higher interest rates. However, the move is likely to be gradual given businesses are still struggling with labor shortages and will be reluctant to cut their workforce.” Chief U.S. economist at High Frequency Economics, Rubeela Farooq said in a statement. Moreover, the U.S. Labor Department also stated that 1.55 million Americans received unemployment claims this week. The number is 48,000 higher compared to last week.
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