Although it increased to its highest level since August, the number of Americans requesting unemployment benefits is still low by historical standards.
According to data released by the Labor Department on Wednesday, 240,000 more people than the week before applied for unemployment benefits. Claims’ week-to-week volatility is tamed by the four-week moving average, which increased by 5,500 to 226,750.
The current low levels of unemployment benefit applications—a proxy for layoffs—indicate that American workers have exceptional job security.
It might not, however.
The Federal Reserve has increased its federal funds rate six times since March in an effort to reduce inflation, which reached four-decade highs early this year. The stress of mortgage rates, which have more than doubled from a year ago, has caused the housing market to collapse. And many experts predict that the United States will enter a recession the following year as slower economic growth is caused by rising borrowing costs.
The labour market, however, has remained robust. Last month, employers added 261,000 jobs, and they are doing so on average every month this year. — on track to surpass 2021 as the second-best year for hiring in government data dating back to 1940 in 2022. For every American who is unemployed, there are almost two available positions. 3.7% is the unemployment rate, just a few percentage points higher than the 50-year low.
Early on in the year, the number of new weekly applications for unemployment benefits was incredibly low and stayed below 200,000 for the majority of February, March, and April. Late in the spring, they started to increase gradually and reached 261,000 by mid-July before falling back down.
According to a research report by High Frequency Economics’ principal U.S. economist Rubeela Farooqi, “We expect layoffs to increase as demand declines in reaction to increased interest rates.” However, considering that firms are still facing a labour shortage and will be reluctant to reduce their personnel, the transition is probably going to be gradual.
According to the Labor Department, 1.55 million persons received unemployment benefits during the week ending Nov. 12, an increase of 48,000 over the previous week.
