The amount of Americans requesting unemployment benefits last week reached its highest level in more than eight months, suggesting that the robust job market may be cooling up.
The Labor Department said on Thursday that the number of applications for unemployment benefits increased by 7,000 to 251,000 for the week ending July 16 from 244,000 the previous week. The most since early November of last year, that number.
Applications from new applicants typically indicate layoffs. The Federal Reserve will certainly disrupt a historically tight labor market as it hikes interest rates to curb inflation.
“The Fed’s rate hikes — aimed at not only lowering inflation but also rebalancing supply and demand for workers — is bound to result in a softening in labor market conditions and a further rise in layoffs over coming months,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a research note.
The overall number of Americans claiming unemployment benefits increased to 1,384,000 for the week ending July 9 from 1,384,000 the week before. Since that number has been hovering around 50-year lows for months, it is clear that even while some firms are firing employees, most of them are finding new positions quite quickly.
The Labor Department earlier this month announced that companies created 372,000 jobs in June, a surprise large increase and a rate comparable to the preceding two months. Given the more general indicators of economic deterioration, economists had anticipated that employment growth would decline significantly last month.
The government revealed this week that consumer prices are continuing skyrocketing, up 9.1 percent in June from a year earlier, the largest annual increase since 1981.
The post-pandemic economy is depicted differently by each of these statistics: Consumers are being forced to cut down on their spending because of inflation, and concerns that the economy may enter a recession are growing as growth slows.
The Federal Reserve increased rates by a half percent in May and a further, very uncommon three-quarter point hike last month in a bid to confront the worst inflation in more than four decades. When the Federal Reserve meets later this month, the majority of experts predict that it will increase its borrowing rate by another half to three quarters of a point.
Even while the job market is currently robust, notable companies including Tesla, Netflix, Carvana, Redfin, and Coinbase have announced layoffs.