The latest weekly data on first-time applications for unemployment benefits showed a rise to 231,000, the highest level since August, indicating a possible cooling off of the white-hot labor market. Continuing claims also increased by 17,000 to 1.78 million, according to the Bureau of Labor Statistics. This follows the recent monthly jobs report which revealed that the US economy added only 175,000 positions in April, below economists’ expectations and a significant decrease from previous months’ job growth trends. Despite this, employers have still been adding an average of 245,500 jobs per month.
Although the unemployment rate increased to 3.9% last month, it marks the 27th consecutive month that the rate has stayed under 4%, a record matching that of the late 1960s. Weekly jobless claims data can be volatile, and while it’s too early to determine a trend from one week’s worth of data, some experts are cautious about the potential impact on the US economy. Layoffs at companies are on the rise, indicating a sense of caution as businesses evaluate the outlook for the second half of the year. The Federal Reserve has been increasing its key lending rate in an effort to control inflation, but Fed Chair Jerome Powell noted a cooling in demand from the high levels of a few years ago.
Economists like Chris Rupkey and Ian Shepherdson are paying close attention to the potential impact of recent jobless claims data. Rupkey emphasized the need to be watchful for any signs of economic turbulence, particularly in light of company layoffs and cautious outlooks. Shepherdson highlighted the importance of monitoring trends in payroll growth, especially in comparison to past recessions where growth slowed significantly in a short period. While it is uncertain if a similar scenario will unfold now, there is heightened concern about the potential risks in the current economic cycle. The Fed’s actions and the overall health of the labor market will continue to be critical factors in determining the future direction of the US economy.
