The number of Americans applying for unemployment benefits last week rose to the highest level in more than eight months, indicating that the hot labor market may weaken.
Unemployment benefit applications for the week ending July 16 rose by 7,000 to 251,000, up from 244,000 the previous week, the Labor Department said Thursday. This is the highest since mid-November last year.
First-time applications generally reflect layoffs. As the Federal Reserve raises interest rates to cool inflation, it is likely to destabilize a historically tight labor market.
"The Fed's rate hikes, aimed not only at reducing inflation but also at rebalancing labor supply and demand, are likely to lead to a softening of labor market conditions and a further rise in redundancies. over the next few months, "said Rubeela Farooqi, chief economist at the United States. High-frequency economy, said in a research note.
The total number of Americans who received unemployment benefits during the week ending July 9 increased by 51,000 over the previous week, to 1,384,000. This figure has been close to the lows of 50 years for months, indicating that while some employers are firing workers, these workers are moving to new jobs with relative ease.
Earlier this month, the Department of Labor reported that employers added 372,000 jobs in June, a surprisingly robust gain and similar to the pace of the previous two months. Economists expected job growth to slow sharply last month given the more general signs of economic weakness.
Meanwhile, consumer prices continue to rise, rising 9.1% in June compared to a year earlier, the largest annual increase since 1981, the government reported last week.
All of these figures paint a divergent picture of the post-pandemic economy: inflation is hitting household budgets, forcing consumers to cut spending and growth is weakening, raising fears that the economy could fall into recession.
In an effort to combat the worst inflation in more than four decades, the Federal Reserve raised rates by half a point in May and another rare increase of three quarters of a point last month. Most economists expect the Federal Reserve to increase its debt ratio by half to three-quarters of a point when it meets later this month.
While the job market is still strong, there have been some high profile layoffs recently announced by Tesla, Netflix, Carvana, Redfin and Coinbase.
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- Occupation
- unemployment claims
- Economy
- Unemployment
- Gas prices
- Inflation
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