The number of Americans filing for unemployment benefits rose to its highest level in more than eight months last week, suggesting that the strong U.S. job market might be slowing down.
For the week ending May 4, unemployment claims increased by 22,000 to 231,000, up from 209,000 the previous week, according to the Labor Department’s report on Thursday. While last week’s claims were the highest since late August 2023, it still represents a relatively low number of job layoffs and is not alarming.
The four-week average of claims, which smooths out some of the weekly fluctuations, rose by 4,750 to 215,000.
Weekly unemployment claims are seen as a gauge for the number of layoffs in the U.S. in any given week and provide insight into the direction of the job market. Since the massive job losses during the pandemic in spring 2020, claims have remained historically low.
In April, U.S. employers added only 175,000 jobs, the smallest increase in six months, indicating a potential easing in the labor market. The unemployment rate also ticked up to 3.9% from 3.8%, marking 27 consecutive months below 4%, the longest stretch since the 1960s.
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Recently, the government reported 8.5 million job openings in March, the lowest in three years.
A slowdown in hiring momentum and wage growth could provide the Federal Reserve with the data needed to consider cutting interest rates. The Fed had raised its benchmark rate 11 times starting March 2022 to combat high inflation following the economic recovery from the COVID-19 recession in 2020. The aim was to loosen the labor market and moderate wage growth, which can drive inflation.
While there were concerns that rapid rate hikes could lead to a recession, jobs have remained plentiful, and the economy has continued to grow due to strong consumer spending.
Despite low levels of layoffs, there has been an uptick in job cuts announced by companies recently, particularly in the technology and media sectors. Alphabet (Google’s parent company), Apple, and eBay are among those that have recently announced layoffs.
