Slightly more Americans apply for jobless benefits, but layoffs remain at healthy levels
A hiring sign is displayed at a gas station in Vernon Hills, Ill., Monday, June 3, 2024. On Thursday, June 6, 2024, the Labor Department reports on the number of people who applied for unemployment benefits last week. (AP Photo/Nam Y. Huh)
The number of Americans applying for jobless claims rose last week, but layoffs remain at healthy levels despite lingering inflation and high interest rates.
Unemployment benefit applications for the week ending June 1 rose by 8,000 to 229,000, up from 221,000 the week before, the Labor Department reported Thursday.
The four-week average of claims, which offsets some of the week-to-week gyrations, fell to 222,250, a small decline of 750 from the previous week.
Weekly unemployment claims are seen as a stand-in for the number of U.S. layoffs in a given week and a sign of where the job market is headed. They have remained at historically low levels since millions of jobs vanished when the COVID-19 pandemic hit the U.S. in the spring of 2020.
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 took hold after the economy rebounded from the COVID-19 recession of 2020. The Fed’s intention was to cool off a red-hot labor market and slow wage growth, which can fuel inflation.
Many economists had expected the rapid rate hikes would trigger a recession, but that’s been avoided so far thanks to strong consumer demand and sturdier-than-expected labor market.
In April, U.S. employers added just 175,000 jobs, the fewest in six months and a sign that the labor market may be finally cooling off. The unemployment rate inched back up to 3.9% from 3.8% and has now remained below 4% for 27 straight months, the longest such streak since the 1960s. The Labor Department issues its May jobs report on Friday. Analysts are forecasting that employers added 180,000 jobs last month.
The government also recently reported that job openings fell to 8.1 million in April, the fewest vacancies since 2021.
Moderation in the pace of hiring, combined with a slowdown in wage growth, could give the Fed the data its been seeking to finally cut its benchmark interest rate. A cooler reading on consumer inflation in April could also play into the Fed’s rate decision next week.
Though layoffs remain low, some high-profile companies have been announcing more job cuts recently, mostly across technology and media. Google parent company Alphabet, Apple and eBay have all recently announced layoffs.
Outside of tech and media, Walmart, Peloton, Stellantis, Nike and Tesla have recently announced job cuts.
In total, 1.79 million Americans were collecting jobless benefits during the week that ended May 25, an increase of 2,000.