WASHINGTON: Last week, the number of Americans filing new unemployment claims unexpectedly increased, reaching a four-month high, possibly indicating a softening in labour demand amid tightening financial circumstances.
However, the labour market remains tight, with the number of unemployed persons at its lowest since the end of 1969 in early May, according to a Labor Department data released on Thursday.
Stock markets have fallen and US Treasury yields have risen as a result of the Federal Reserve’s tough monetary policy stance in its fight against inflation. Despite the increase in claims last week, labour constraints may limit layoffs. At the end of March, there were a record 11.5 million job opportunities.
“Recent layoff announcements warrant keeping an eye on corporate recruiting decisions,” said one analyst.
“For the time being, labour demand appears to be strong, which, combined with a lack of supply, should prevent layoffs.”
For the week ending May 14, initial claims for state unemployment benefits jumped by 21,000 to a seasonally adjusted 218,000, the highest amount since January. Reuters polled economists, who predicted 200,000 applications for the most recent week.
In Kentucky, claims increased by 6,728 whereas in California, claims increased by 3,315. In Pennsylvania, Ohio, and Illinois, there were also large increases in filings.
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Since reaching a 53-year low of 166,000 in March, claims have generally remained flat. Strong wage gains are being generated by the rapidly tightening labour market, which is helping to boost overall inflation.
Since March, the Federal Reserve of the United States has increased its policy interest rate by 75 basis points. At each of its upcoming meetings in June and July, the Fed is likely to raise the overnight rate by half a percentage point.
In early April 2020, claims reached an all-time high of 6.137 million. The statistics from last week covers the period when the government questioned employers for the nonfarm payrolls section of the May jobs report.
Between the April and May survey periods, claims increased. In April, payrolls climbed by 428,000, marking the 12th consecutive month of job growth in excess of 400,000.
Data on the unemployment rate in mid-May will be released next week, providing more insight into the state of job growth this month.
During the week ending May 7, the number of people getting benefits after an initial week of assistance declined by 25,000 to 1.317 million. The so-called continuing claims were at their lowest point since December 1969.
Manufacturing appears to be slowing as well. The Philadelphia Fed’s business conditions index fell to 2.6 in May from 17.6 in April, according to a separate study released on Thursday.
However, in the region that includes eastern Pennsylvania, southern New Jersey, and Delaware, new orders, unfilled orders, and shipments all increased. At the factory gate, inflation pressures appeared to have peaked as well.
The six-month business conditions index in the Philadelphia Fed survey fell to 2.5 this month.
