The employment market is beginning to chill in response to high interest rates, as evidenced by the unexpectedly high number of Americans claiming for unemployment benefits last week—the highest level in ten months.
The Labor Department on Thursday revealed figures that indicate initial claims for the week ending June 8 rose by 13,000 to 242,000, surpassing the pre-pandemic average of 218,000 claims in 2019. After August 2023, this is the largest number of unemployment claims.
A total of 1.82 million continuing claims—filed by Americans who have been receiving unemployment benefits for a continuous period of time—were made for the week ending June 1, up 30,000 from the week before.
Comerical Bank senior economist Bill Adams stated, “The first half of June saw a spike in initial jobless claims, suggesting the move higher in the unemployment rate might hold in the next release.” “But jobless claims are volatile month to month, so it’s very early to call this a sign of broader labor market weakness.”
In an effort to calm the economy and the labor market, the Federal Reserve boosted interest rates to their highest point in 2022 and 2023. The weaker-than-expected figures might have significant ramifications for the Fed. In order to ensure that excessive inflation is controlled, policymakers have indicated that they will maintain current rates at high levels.
The labor market is slowing down, and white-collar workers are finding it difficult to find jobs.
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The central bank may continue to lower rates in September, according to experts, notwithstanding the most recent jobless numbers.
“The latest data in hand nudge the door a little wider open for the Fed to begin making an interest rate cut later this year,” Adams commented.
Notwithstanding economists’ predictions for a recession, the job market has stayed unusually tight over the past year. Despite the rapid pace of the previous year, economists claim that it is starting to stabilize and is not at all unstable.
At the beginning of the month, the Labor Department said that although employment increased by 272,000 in May, the unemployment rate was unexpectedly higher at 4%.