WASHINGTON – The number of Americans filing new claims for unemployment benefits rose unexpectedly last week, reaching a four-month high, signaling that labor demand has cooled somewhat amid potential economic hardship.
But as the labor market remains tense, a report by the Department of Labor on Thursday showed that the number of unemployed people has been the lowest since the end of 1969 in early May.
The Federal Reserve’s aggressive monetary policy stance as it fights inflation has stopped stock market sales and boosted US Treasury yields. Despite last week’s jump in demand, labor shortages could ease cuts. At the end of March there were a record 11.5 million job opportunities.
“Recent layoff announcements have the potential to change business decision-making,” said Rubella Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
“For the time being, the demand for labor still seems to be strong and should be matched by a backward supply, the number of layoffs should be limited.”
Initial claims for state unemployment benefits rose from 21,000 to 218,000 seasonally consistent 218,000 for the week ended May 14, the highest level since January. Economists surveyed by Reuters forecast 200,000 applications last week.
There were 6,728 jumps in claims in Kentucky, while California rose 3,315. There were also significant gains in filing in Pennsylvania, Ohio and Illinois.
Demands have been running high since the 53-year-old hit more than 166,000 in March. The rapidly tightening labor market is creating strong wage gains that are helping to fan the overall inflation in the economy.
The US Federal Reserve has raised its policy interest rate by 75 basis points since March. The Fed is expected to raise interest rates by half a percentage point overnight at its next meetings in June and July.
At the beginning of April 2020, claims fell to an all-time high of 6.137 million. Last week’s data covered the period during which the government surveyed employers for the non-firm pay-roll portion of the May employment report.
Demand increased during the April and May survey period. Wages rose 428,000 in April, the 12th month of more than 400,000 jobs.
Next week’s data on unemployment rankings in mid-May will shed more light on job growth this month.
The number of beneficiaries dropped from 25,000 to 1.317 million after the initial week of aid in the week ending May 7. This was the lowest level of so-called continued claims since December 1969.
There are also signs of slowing production. A separate report by the Philadelphia Fed on Thursday showed that its business condition index fell to 2.6 in May from 17.6 in April.
However, new orders, incomplete orders and shipping arrangements have increased in factories in the region covering East Pennsylvania, South New Jersey and Delaware. Inflationary pressures have also peaked at the factory gates.
The Philadelphia Fed survey’s six-month trading position index fell to 2.5 this month from 8.2 in April. Its six-month capital expenditure index fell to 9.6 from a reading of 19.9 in the previous month. (Reporting by Lucia Mutikani, edited by Paul Simao)