Last week data showed the number of Americans applying for unemployment benefits remained elevated as observers noted it was a sign the Federal Reserve’s year long campaign of interest rate hikes may finally be having its effects in cooling what has proven to be an unusually resilient job market.
For the week ending June 10th, US applications for jobless claims were 262,000, according to Labor Department statistics released Thursday, which was more than analysts had been expecting. Following a revision of last week’s number, which was revised up by 1,000, this week mirrored last week’s data. The last two weeks have yielded the highest claims numbers since October of 2021.
The four week moving average, which is designed to filter out week to week fluctuations to give a better picture of overall trends showed a rise of over 9,000 to 246,750, which was the highest level since November of 2021.
Since over 20 million jobs evaporated during the pandemic’s start in the spring of 2020, US employers have been on a hiring binge. That has produced an unusually resilient job-market despite the Federal Reserve’s aggressive campaign to cool off the economy and labor market, as it has sought to contain an unusually persistent inflation unlike anything seen since the early 1980’s.
The Federal Reserve announced on Wednesday it was going to pause its interest rate hikes to assess the effects it is having on the economy and prices, though some have speculated there will be another half-point increase of rates by the end of the year.
Inflation has been slowly tamped down, though not as quickly as some observers would have liked. Despite the effects on the broader economy, the labor market has remained unusually strong throughout the more than year-long campaign of rate hikes designed to cool it.
Last month US employers added 339,000 jobs, which was well above expectations and served as an encouraging sign the job market is still healthy, even as unemployment rose to 3.7%. Employers posted 10.1 million job openings, an increase from 9.7 million in March, and the highest number since January. Economists had expected vacancies to decline.
Observers note that these are not the only numbers showing the Federal Reserve’s policies are taking hold. From January through March, the US economy grew at a lackluster 1.3% rate year over year, as businesses trimmed their inventories in the event of an economic slowdown. It was a slight improvement over the initial growth estimate of 1.1%.
In addition, three bank failures have been blamed in part on the Fed’s policy, and the manufacturing sector has been contracting.
In the technology sector, there have a number of high profile layoffs, among companies which said they had over-hired during the pandemic. In recent months, IBM, Microsoft, Salesforce, Twitter, Lyft, LinkedIn, Spotify and DoorDash have all announced layoffs. Since November, Amazon and Facebook parent Meta have each announced two sets of layoffs.
McDonald’s, Morgan Stanley and 3M have also recently announced job cuts outside the tech sector.
In total, 1.78 million people were collecting unemployment checks in the week that ended June 3.
