The number of Americans applying for unemployment benefits last week jumped to its highest level since October 2021, even as the labor market remains one of the healthiest parts of the U.S. economy.
Applications for jobless claims rose to 261,000 for the week ending June 3, an increase of 28,000 from the previous week’s 233,000, the Labor Department reported Thursday. The four-week moving average of claims, which evens out some of the weekly variations, rose by 7,500 to 237,250.
“Weekly claims are up from exceptionally low levels throughout 2022 which sometimes dipped below 200,000 per week,” Stuart Hoffman, senior economic advisor at PNC, said in a note.
“Job losses have begun to spread from the tech and finance industries that had dominated headlines through the end of last year and into the first five months of 2023. Headline-grabbing layoff announcements, however, typically take some time to be put into effect.”
The U.S. economy has added jobs at a furious rate since the pandemic purge of more than 20 million jobs in the spring of 2020. However, a number of high-profile layoff announcements from technology and finance firms indicate the job market, especially for white-collar workers, is cooling from its red-hot state earlier in the pandemic.
Though the labor market remains strong, there have been notable high-profile layoffs recently, mostly in the technology sector, where many companies now acknowledge overhiring during the pandemic. IBM, Microsoft, Salesforce, Twitter, Lyft, LinkedIn, Spotify and DoorDash have all announced layoffs in recent months. Amazon and Facebook parent Meta have each announced two sets of job cuts since November.
Outside the tech sector, McDonald’s, Morgan Stanley and 3M have also recently announced layoffs.
The Federal Reserve in May raised its key interest rate for the 10th time as it tries to slow the job market and stifle decades-high inflation.
Could sway Fed officials
The latest unemployment claims figures, as well as data that show the unemployment rate jumped last month as wage growth slowed, could sway Fed officials one way or the other with regard to its next rate hike move. Most economists are predicting that the Fed will pause its rate hikes at its meeting next week, though the strong labor market could convince the central bank to stay the course with another small quarter-point increase.
The U.S. economy grew at a lackluster 1.3% annual rate from January through March as businesses wary of an economic slowdown trimmed their inventories. That’s a slight upgrade from its initial growth estimate of 1.1%.
