US Jobless Claims Continue to Rise, Signaling Softening Labor Market
The latest data from the US Department of Labor has shown that continuing claims, or the number of people who have already filed an initial application and are now claiming unemployment benefits, rose by 61,000 to 1.87 million in the week ended April 8. Insight into the speed at which unemployed Americans secure a new job can be gleaned from this graphic.[0] During the week ending April 8, the number of individuals who were already receiving benefits, known as continuing jobless claims, rose by 61,000 from the revised level of 1,804,000 in the previous week, reaching a total of 1,810,000. This is the highest level for insured unemployment since November 27, 2021 when it was 1,964,000.[1] The report said: “This is the highest level for insured unemployment since November 27, 2021 when it was 1,964,000.[1]”
Continuing Claims also ratcheted up higher, to 1.865 million longer-term jobless claims — the highest single-week read since November 2021. The figure exceeds the anticipated 1.825 million and the revised 1.804 million from the prior week.[2] Once more, the benchmark revisions have aligned these statistics with actuality. Prior to this, our numbers were situated under 1.7 million long-term claims, highlighting a historically sturdy job market.[2]
Despite the job market’s rip-roaring strength for months, even as the US Federal Reserve tightened, there are now some signals that the labor market is beginning to soften in response to the barrage of rate revisions, the most recent of which being a quarter of a percentage point increase in the federal funds rate last month.
The four-week moving average for continuing claims, which eliminates week-to-week variability, declined marginally from a revised 240,250 to 239,750. The four-week moving average for initial claims, which smooths out week-to-week volatility, ticked down to 239,750. Since October, the average for continuing claims has increased every week.[0]
In a report released earlier this month, it was revealed that there were approximately 9.9 million job vacancies in February. This marked the first time since May 2021 that the number of open positions dropped below 10 million.[3] This could be seen as evidence that the labor market is beginning to soften.
Last week, there was an increase in the number of Americans applying for unemployment benefits, which was higher than anticipated. This serves as proof that the labor market is still weakening due to the rise in borrowing costs. Increasing unemployment claims, which can indicate job cuts, suggest that the robust labor market is beginning to respond to the Federal Reserve's actions to limit monetary policy and reduce inflation through a slowdown in overall spending. There has been an upward trend in claims in the past few weeks.[4]
The Fed's battle against inflation is aided by a declining labor market as it reduces the strain on wage growth.[5] But it is also proof that the economy is slowly cooling as a result of the tightening financial conditions.[3] CME Group's FedWatch tool calculates the probability of the Fed raising rates again in the short-term market using futures contract prices, and investors currently estimate an 87% chance of this happening.[4]
0. “US recurring jobless claims jump to highest since November 2021” Brunswick News, 20 Apr. 2023, https://thebrunswicknews.com/news/business/us-recurring-jobless-claims-jump-to-highest-since-november-2021/article_a1f17133-fb5f-5ad5-b7f2-3835981ff4eb.html
1. “Department of Labor Reports 245,000 Initial Unemployment Claims For The Week Ending April 15, 2023 – An Increase …” Sierra Sun Times, 20 Apr. 2023, https://goldrushcam.com/sierrasuntimes/index.php/news/local-news/45427-department-of-labor-reports-245-000-initial-unemployment-claims-for-the-week-ending-april-15-2023-an-increase-of-5-000-from-the-previous-week-s-revised-level
2. “Jobless Claims Increased More Than Expected” Yahoo Finance, 20 Apr. 2023, https://finance.yahoo.com/news/jobless-claims-increased-more-expected-145302290.html
3. “Jobless claims rise higher than expected as layoffs continue to mount” Fox Business, 20 Apr. 2023, https://www.foxbusiness.com/economy/jobless-claims-rise-higher-expected-layoffs-continue-mount
4. “Jobless claims rise as labor market starts to cool” Washington Examiner, 20 Apr. 2023, https://www.washingtonexaminer.com/policy/economy/jobless-claims-rise-as-labor-market-starts-to-cool
5. “Jobless Claims Exceed Expectations, Signaling Early Signs Of Cracks In US Labor Market – SPDR S&P 500 (ARCA:SPY)” Benzinga, 13 Apr. 2023, https://www.benzinga.com/economics/macro-economic-events/23/04/31786112/jobless-claims-exceed-expectations-signaling-early-signs-of-cracks-in-us-labor-ma
