The number of Americans filing for unemployment benefits inched up last week and remain historically low. However the total number of people collecting jobless benefits continues to grow.
The Labor Department reported Wednesday that jobless claims for the week ending June 29 rose by 4,000 to 238,000 from 234,000 the previous week. The data was issued one day earlier than its regular Thursday release due to the July Fourth holiday.
The total number of Americans collecting unemployment benefits rose for the ninth straight week, to 1.86 million, for the week of June 22. That’s the most since November of 2021.
Economists say that while the number of new people applying for jobless aid each week remains relatively modest, some who are receiving benefits are finding it harder to land new jobs. That suggests that demand for workers is waning, even as the economy remains strong. That, combined with recent data showing that inflation continues to ease, could point to the so-called “soft-landing” the Federal Reserve was aiming for when it began its rate-hiking campaign.
The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 in an attempt to extinguish the four-decade high inflation that shook the economy after it rebounded from the COVID-19 recession of 2020. The Fed’s intention was to cool off a red-hot labour market and slow wage growth, which can fuel inflation.
Many economists had expected the rapid rate hikes would trigger a recession, but so far that hasn’t happened, thanks in large part to strong consumer demand and sturdier-than-expected labour market.
“The data bear watching for signals about a more material weakening in the labour market going forward, which will have implications for Fed policy,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
The Fed’s next policy meeting comes at the end of this month, but few experts are expecting a rate cut then. However, investors are betting that there is nearly a 70% chance for a reduction at the Fed’s September meeting.
The Fed will release the minutes from its most recent interest rate policy meeting Wednesday afternoon and there may be more hints as to how Fed officials feel about the state of the U.S. economy, and what they may be thinking about current interest rates.
While the labour market remains sturdy, recent government data suggest some softness taking hold.
The four-week average of claims, which evens out some of the week-to-week volatility, also continued to climb, rising by 2,250 to 238,500.
Applications for jobless benefits are trending higher in June after mostly staying below 220,000 this year. The unemployment rate ticked up to 4% in May, despite the fact that America’s employers added a strong 272,000 jobs last month. Job postings in May rose slightly to 8.1 million, however, April’s figure was revised lower to 7.9 million, the first reading below 8 million since February 2021.
The government issues its June jobs report on Friday.
Weekly unemployment claims are widely considered as representative of layoffs.