US Jobless Claims Rise Slightly as Labor Market Remains Healthy

US Jobless

The number of Americans filing for unemployment benefits rose slightly last week but remains at healthy levels that continue to show a strong U.S. labor market. According to the latest report from the Bureau of Labor Statistics, U.S. applications for jobless claims were 232,000 for the week ending May 27, an increase of just 2,000 from the previous week. The weekly claims numbers are considered representative of the number of U.S. layoffs.

The four-week moving average of claims, which flattens out some of the week-to-week volatility, fell by 2,500 to 229,500. This is the lowest level since March 1973, when the U.S. population was much smaller. The low level of claims indicates that employers are holding on to their workers and are confident about the economic outlook.

US Jobless

Job market shows signs of weakness amid Fed’s tightening policy

Since the pandemic purge of more than 20 million jobs three years ago, the U.S. economy has added jobs at a furious rate and Americans have enjoyed unusual job security. That’s despite interest rates that have been rising for more than a year and fears of a looming recession.

In early May, the Fed raised its benchmark lending rate for the 10th time in a row in its bid to cool the economy and bring down four-decade high inflation. Part of the Fed’s goal is to cool the labor market, which still favors workers, though there have been some signs of weakness in recent months.

In April, U.S. employers added a healthy 253,000 jobs and the unemployment rate dipped to 3.4%, matching a 54-year low. But the figures for February and March were revised lower by 149,000 jobs, potentially signaling that the Fed’s rate policy strategy is starting to cool the job market.

The May jobs report comes out Friday. Analysts are forecasting that U.S. employers added 188,000 jobs in May — not a bad number, but nowhere near the average monthly hiring gains of the past three years.

Job openings rise in April as employers struggle to fill positions

In somewhat of a surprise Wednesday, the government reported that U.S. job openings rose in April, with employers posting 10.1 million job openings, up from 9.7 million in March and the most since January. Economists had expected vacancies to slip below 9.5 million.

The increase in job openings suggests that employers are having trouble finding qualified workers to fill their positions, especially in sectors such as construction, manufacturing, health care and hospitality. Some analysts attribute this to a mismatch between the skills and locations of available workers and the demands of employers.

Others point to factors such as enhanced unemployment benefits, childcare issues and health concerns that may be keeping some workers on the sidelines. The Biden administration has defended the unemployment benefits as a lifeline for millions of Americans and has urged states to use federal funds to provide incentives for workers to return to work.

Wednesday’s job openings report — along with layoffs data and Friday’s jobs report — could help sway Fed officials one way or the other with regard to its next rate hike move. The Fed is hoping to achieve a so-called soft landing — lowering growth just enough to bring inflation under control without causing a recession. Economists are skeptical, with many expecting the U.S. to enter a recession later this year.

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