Recurring applications for US jobless benefits rose to the highest level since the end of 2021, a warning sign suggesting that it’s taking longer for unemployed people to find a job.
Continuing claims, a proxy for the number of people receiving benefits, increased to 1.84 million in the week ended June 15, according to Labour Department data released Thursday (June 27).
Meanwhile, first-time claims ticked down to 233,000 last week, a period that included the Juneteenth holiday.
Hiring has slowed significantly from the pandemic-recovery era of widespread labour shortages and the unemployment rate ticked up last month to 4% for the first time in two years.
Economists and Federal Reserve policymakers are watching the claims data for signs of whether the labour market, which so far has been surprisingly resilient and is continuing to soften.
Goldman Sachs chief economist Jan Hatzius recently said the labour market is reaching a potential “inflection point,” where a further material softening in demand for workers could lead to a rise in joblessness.
“The increase in continuing claims for jobless benefits will likely add upward pressure to the unemployment rate. Even as initial claims inched down for a second straight week, we think it matters more that an increasing number of workers are languishing,” said Bloomberg economist Stuart Paul.
Weekly claims data tend to be volatile, even more so around holidays and school breaks. The four-week moving average, which smooths short-term fluctuations, increased to 236,000, the highest since September.
Initial claims before adjustment for seasonal influences decreased by 3,570 to about 224,400. Minnesota, Texas and Pennsylvania saw the highest declines. New Jersey had a sizable gain in claims.
In the 20 years preceding the Covid-19 pandemic, weekly initial applications averaged about 345,000, and continuing claims were roughly 2.9 million.
Separate data Thursday showed that orders placed with US factories for business equipment unexpectedly declined in May, indicating firms remain cautious about investment amid higher-for-longer borrowing costs and softer demand. – Bloomberg
