A higher-than-expected rise in the number of Americans filing new claims for unemployment benefits last week suggests that rising borrowing costs are dampening demand in the economy and that conditions in the labor market are easing.
The slowdown in economic momentum was underscored by another Labor Department data on Thursday showing producer prices fell unexpectedly in March, while underlying producer inflation subsided.
Still, the labor market and inflation have not cooled fast enough to stop the Federal Reserve from raising interest rates again next month.
“After a year of rate hikes, Fed officials couldn’t ask for better data today as the economy appears to have finally run out of gas,” said Christopher Rupkey, chief economist at FWDBONDS in New York. ‘He said. “Fed officials thought the economy could slow down after the banking crisis, but now it looks like it’s happening.”
Initial claims for state unemployment benefits increased from 11,000 to 239,000 seasonally adjusted in the week ending April 8.
Economists surveyed by Reuters had forecast 232,000 claims in the most recent week.
It was the highest since January 2022, when 251,000 people applied for unemployment benefits.
Unreconciled claims rose to 234,577 from 27,457 last week, while California filings surged by 11,388.
Claims also increased significantly in New Jersey, Pennsylvania, Texas, New York and Connecticut. This offset a notable drop in Ohio.
Claims so far this year are much higher than previous estimates, according to the government’s annual revision to data released last week, amid a surge in high-profile job cuts in the tech industry and other sectors highly sensitive to interest rates. is consistent with
However, the number of applications is still below 270,000, and economists say a drop below that level would signal a deterioration in the labor market.
Last Friday’s jobs report showed a slow but still solid pace of employment growth in March.
The number of job openings at the end of February fell below 10 million for the first time in about two years.
Nonetheless, there were 1.7 vacancies for every unemployed person that month, which may make it easier for some laid-off workers to get jobs.
After the first week of assistance, the number of people receiving benefits on behalf of employment fell from 13,000 to 1.81 million in the week ending April 1, according to claims reports.
There is yet no sign that the collapse of two local banks last month has tightened credit conditions and led to job losses.
Economists expect small businesses such as restaurants, bars and nail salons to be hit by the credit crunch.