The number of Americans filing for unemployment benefits last week unexpectedly jumped to the highest level in 10 months, the latest sign that the labor market is starting to cool in the face of high interest rates.
Figures released Thursday by the Labor Department show initial claims for the week ending June 8 increased by 13,000 to 242,000, above the 2019 pre-pandemic average of 218,000 claims. It marks the highest level for jobless claims since August 2023.
Continuing claims, filed by Americans who are consecutively receiving unemployment benefits, also rose to 1.82 million for the week ended June 1, an increase of 30,000 from the previous week.
THE NUMBER OF HIGH-PAYING JOBS IS DWINDLING
“Initial jobless claims spiked in the first half of June, suggesting the unemployment rate’s move higher might hold in the next release,” said Bill Adams, chief economist for Comerica Bank. “But jobless claims are volatile month to month, so it’s very early to call this a sign of broader labor market weakness.”
The weaker-than-expected data could have major implications for the Federal Reserve, which raised interest rates in 2022 and 2023 to the highest level in two decades in an attempt to cool the economy — and the labor market. Policymakers have signaled they will hold rates at elevated levels until they are certain that high inflation is conquered.
WHITE-COLLAR WORKERS ARE STRUGGLING TO FIND JOBS AS THE LABOR MARKET SLOWS
Experts say the latest jobless data could keep the central bank on track to cut rates in September.
“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 said.
The labor market has remained historically tight over the past year, defying economists’ expectations for a slowdown. Although economists say it is beginning to normalize after last year’s blistering pace, it is nowhere near breaking.
The Labor Department reported at the start of the month that the economy added 272,000 jobs in May, but that the unemployment rate unexpectedly ticked higher to 4%.
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