WASHINGTON – The number of Americans filing new claims for unemployment benefits rose unexpectedly last week, reaching a four-month high and signaling a possible cooling of labor demand amid tight financial conditions.
Nevertheless, the labor market remained tense as the Labor Department report on Thursday found that the number of unemployed was the lowest in about 52-1 / 2 years at the beginning of May. A study by the Philadelphia Federal Reserve also showed signs of declining labor demand, with significant declines in employment levels and average working week in factories in the Mid-Atlantic region this month.
The Federal Reserve’s aggressive monetary policy stance because it has stopped selling a stock market in the fight against inflation and boosted US Treasury yields and the dollar. Several retailers, including Walmart Inc, cut their full-year earnings forecasts this week, warning that inflation is cutting profits.
“This will slow down growth in the retail and e-commerce industries,” said Bill Adams, chief economist at Comerica Bank in Dallas, Texas. “The sell-off of the stock market can lower business sentiment and make some businesses more cautious about hiring, especially those that rely on investors’ money for cash-flow negative and activities like many startups.”
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. At the beginning of April 2020, they dropped to an all-time high of 6.137 million.
Some economists see the growing demand as the beginning of the labor market normalization process following the distortions caused by the COVID-19 epidemic. By the end of March, a record 11.5 million jobs had been created and an all-time high of 4.5 million people had left their jobs.
Confusion between supply and demand is creating strong wage gains that are helping to fan the overall inflation in the economy. The Fed has raised its policy interest rate by 75 basis points since March. The US Federal Reserve is expected to raise interest rates by half a percentage point overnight at each of its subsequent meetings in June and July.
Isfar Munir, an economist at Citigroup in New York, said: “Employers are focusing on retaining employees because of the tight labor market, which has resulted in far less initial demands than usual.” “The growth we are seeing now may be the first step towards normalizing the labor market.”
Wall Street stocks were the most traded. The dollar depreciated against the basket of currencies, while the US Treasury rose.
The number of unemployed is shrinking
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.
While this will signal a moderation in the pace of job growth this month, next week’s data on unemployment positions in mid-May will shed more light on job growth this month. Wages rose 428,000 in April, the 12th month of more than 400,000 jobs.
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 demand since December 1969. Continuing claims have been as downward as the initial application. Increased for convenience.
Daniel Silver, an economist at JPMorgan in New York, said: “One possible explanation for the combination of higher initial demand trends and lower continuous demand trends is that layoffs have increased but people are still able to easily find other jobs.”
In a separate report on Thursday, the Philadelphia Fed said its business condition index fell to a two-year low in April from 17.6 in May to 2.6 in May. A reading above zero indicates an increase in production in areas covering East Pennsylvania, South New Jersey and Delaware.
The factory employment survey measure fell from 41.4 to 25.5 in April. Its average work week measurement fell to 20.1 from 16.8 in the previous month. About 27% of surveyed companies reported employee growth, the lowest in a year and less than 42% in April. The number of those whose heads have not changed has reached 71%, the highest since December 2020.
There was also disappointing news in the housing market.
Existing home sales fell 2.4% to a seasonally consistent annual rate of 5.61 million units, the lowest level since June 2020, when sales resurfaced from the coronavirus lockdown downturn, according to the third report from the National Association of Realtors.
Although monthly sales fell for the third month in a row, the average existing home price rose 14.8% year-on-year to সর্ব 391,200 amid an ongoing shortage of inventory. With a 30-year fixed-rate mortgage rate above 5%, sales could maintain their downward trend.
(Reporting by Lucia Mutikani, edited by Paul Simao)