The number of first-time applications for U.S. unemployment benefits rose to the highest level since August 2023, a sign that the robust U.S. labor market is cooling.
The number of new jobless claims for the week ending May 4 rose by 22,000 to 231,000, according to the Labor Department. The data was released on Thursday — exceeded Bloomberg economists’ expectations of 212,000 applications.
The four-week rolling average, which helps smooth out fluctuations in weekly numbers, rose to 215,000 cases, an increase of 4,750 cases from the previous week and the highest number since February.
Until this week, the number of first-time applications had not exceeded a narrow range of 200,000 to 222,000 over the past three months, according to the . bloomberg.
But the latest statistics show that the number of layoffs across U.S. employers is on the rise.
The latest jobless claims figures come after last month’s employment report was weaker than expected, with just 175,000 new jobs in April. That fell short of the 240,000 that analysts had predicted and renewed hopes for a Fed rate cut.
A month ago, March saw a staggering increase of 303,000 cases, while February’s headline figure was 270,000 cases. The March statistics have since been revised upward by 12,000 to a total of 315,000.
Before adjusting for seasonal effects, the number of first-time claims rose by nearly 20,000 to 209,324, but the Department of Labor said this was due to a sharp rise in unemployment claims in New York state, which increased by 10,000 to 209,324. The above number of applications contributed to more than half of the recent number of applications.
Applications are also on the rise in California, where large numbers of hourly workers lost their jobs after the state implemented a $20 minimum wage provision for fast food workers in April. About 4,200 new unemployment claims were filed during the week. 1.
Indiana and Illinois also saw notable increases of more than 2,000 people.
Since the beginning of this month, major companies such as Peloton, Tesla and Byron Allen’s Allen Media have announced significant layoffs.
Peloton, for example, announced last week that on the same day that CEO Barry McCarthy announced his resignation, the company would reduce its workforce by about 15%, impacting about 400 jobs.
The next day, Allen Media, which operates the Weather Channel and owns 12 cable networks and 27 ABC, CBS, Fox and NBC television stations in 21 markets, laid off about 300 employees, or 12% of its workforce. Did.
Tesla followed suit on Monday, laying off employees in its software, services and engineering division, a month after the electric car maker announced it was dissolving its EV charging division and cutting its workforce by more than 10% worldwide. revealed.
Continuing claims, which measures the number of people receiving unemployment benefits, also rose to 1.79 million in the week ending April 27, the highest increase in a month.
Faced with stubbornly high inflation and a buoyant labor market, Wall Street reversed expectations for three 25 basis point rate cuts starting in June.
It was widely expected on the Street that there would only be two 25 basis point rate cuts starting in September.
But JPMorgan’s chief U.S. economist Michael Feroli said after the April jobs report that the latest jobs report shows the nation’s largest financial institutions are hopeful for “first easing in July.” .
“The market has not moved yet, but the Fed will be willing to withdraw some of its policy restraints if the next two jobs reports show that labor market activity continues to cool,” Feroli said. added.
Historically, a strong job market keeps wages and consumer spending levels rising, which in turn leads to higher inflation and interest rates.
