A greater number of Americans lodged claims for joblessness last week. Even though the labor market remains generally robust, there are indications that it might be gradually cooling off.
Requests for unemployment benefits climbed by 13,000 to 231,000 in the week ending Nov. 11, as reported by the Labor Department on Thursday. This figure marks the highest in three months.
Applications for unemployment benefits are seen as an indication of the number of layoffs in a given week.
For almost two years, the Federal Reserve has been curbing the pace of the economy and labor market in an attempt to prevent the highest inflation in four decades. As part of this endeavor, the central bank has raised its benchmark rate 11 times since March 2022.
For months, it seemed that the Fed’s forceful measures had little impact, compelling companies to offer higher salaries to attract employees.
However, fissures could be appearing.
In total, about 1.87 million individuals were obtaining unemployment benefits in the week ending Nov. 4, approximately 32,000 more than the previous week and the highest in nearly two years. This marks the sixth consecutive week of claims increasing.
“Job expansion continues to be robust, and businesses have yet to commence significant downsizing,” stated Rubeela Farooqui, top U.S. economist at High Frequency Economics. “Nevertheless, data on ongoing claims suggest a slowdown in labor demand, which is what the Fed desires to observe.”
Economists indicate that ongoing claims are escalating as many of those already unemployed are now encountering difficulties in finding work, signaling that the labor market is looser than in the post-pandemic era.
In October, U.S. employers decreased their hiring, adding a modest yet healthy 150,000 positions. This is merely the third instance in nearly three years that monthly job increases have dropped below $200,000. However, all three of these instances have occurred in the last five months.
“The claims data aligns with a job market that is cool enough to forestall rate hikes, yet robust enough to contemplate reducing rates in the near future,” remarked Nancy Vanden Houten, an economist at Oxford Economics. “The Fed is certainly heartened by recent inflation data, but needs to witness further deceleration in the labor market and wage growth to ensure that inflation is on a steady course back to 2%.”
Federal Reserve officials chose to leave the benchmark rate untouched at their most recent policy gathering. Although another hike before the year concludes has not been ruled out, recent data indicates that inflation continues to ease, a priority for Fed Chairman Jerome Powell.
The overall inflation did not increase from September to October, representing the first time that consumer prices collectively did not ascend from one month to the next in over a year. In comparison to a year earlier, prices climbed 3.2% in October, the smallest escalation since June, though still surpassing the Fed’s 2% inflation goal.
The four-week moving average of jobless claims applications, which smooths out some weekly volatility, increased by 7,750 to 220,250.
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