The number of Americans filing new jobless claims grew slightly last week, indicating that the labor market remained tight despite mounting worries of a recession as borrowing prices rose.
For the week ending May 27, the first applications for state unemployment benefits increased by 2,000 to a seasonally adjusted 232,000. Reuters polled economists and predicted 235,000 claims for the new week.
Claims remain minimal by historical standards regardless of the 500 basis points of interest rate hikes from the Federal Reserve since March 2022, when the U.S. central bank started its rapidest monetary policy tightening since the 1980s to control inflation.
Despite employment growth decelerating from the previous year’s strong pace, the need for employment is still strong.
The government announced on Wednesday that there were 10.1 million vacancies at the end of April, with 1.8 job openings for every unemployed individual, well above the 1.0–1.2 range that is constant with a labor market that is not creating too much inflation.
Though there have been high-profile job losses in the technology sector and interest rate-sensitive industries such as housing, employers have been hoarding workers after struggling to find labor in the months following the pandemic.
According to the claims report, the number of people obtaining benefits after the first week of assistance climbed by 6,000 to 1.795 million for the week ending May 20.
Because the claims data falls outside the survey period, it has no influence on Friday’s employment report for May.
According to a Reuters poll of experts, nonfarm payrolls are expected to rise by 190,000 in May after climbing by 253,000 in April. The unemployment rate is viewed as reaching 3.5% from a 53-year low of 3.4% in April.
The Fed’s Beige Book report on Wednesday bolstered expectations for a slowdown in job growth, indicating that the labor market “continued to be strong” in May but that “many contacts” were “fully staffed.”
Many “were pausing hiring or reducing headcounts due to weaker actual or prospective demand or greater uncertainty about the economic outlook,” it stated.
According to a separate study released on Thursday by global outplacement agency Challenger, Gray & Christmas, job cutbacks declared by US-based firms climbed 20% to 80,089 in May. This year, companies have reported 417,500 layoffs, a 315% increase over the same period last year. With the exception of 2020, when the pandemic began, this is the greatest January-May total since 2009.
