Job seekers during a construction career fair at Cape Fear Community College in Wilmington, North Carolina, USA, Wednesday, March 15, 2023.
Allison Joyce | Bloomberg | Getty Images
Initial jobless claims reached their highest level since late August 2023, a possible sign that an otherwise robust labor market is changing.
Jobless claims totaled 231,000 in the week ended May 4, seasonally adjusted, up 22,000 from the previous period and higher than the Dow Jones estimate of 214,000, the Labor Department reported Thursday. It was the highest number of claims since August 26, 2023.
The rise in claims follows a series of largely positive hiring reports, although hiring in April was low compared to expectations. Additionally, job openings have declined as the job market is expected to slow over the course of the year.
Along with the increase in layoffs, the report showed standing claims, which are a week behind, rose to 1.78 million, up 17,000 from the previous week. The four-week moving average of claims, which helps smooth out weekly number volatility, rose to 215,000, up 4,750 from the previous week.
“Weekly jobless claims are one of the most timely indicators of when the economy will begin to seriously deteriorate, and the scale of new layoffs this week looks worrying,” wrote Christopher Rupkey, chief economist at FWDBONDS. “One week doesn’t make a trend, but we can no longer be sure that calm seas lie ahead for the U.S. economy if today’s weekly jobless claims are any indication.”
Nonfarm payrolls rose by 175,000 in April, below the Wall Street estimate of 240,000 and the smallest increase since October 2023. However, the unemployment rate was 3.9%, remaining below 4% since February 2022 .
Markets had little reaction to the release of jobless claims, with stock market futures slightly negative and Treasury yields mixed.
Excluding seasonal adjustment, claims totaled 209,324, an increase of 10.4% compared to the previous week. New York alone saw an increase of more than 10,000, accounting for more than half of the total increase.
“A small number of applications had become almost monotonous, and while this surprise increase may well be an outlier, we should expect more volatility and a trend toward higher applications as the labor market normalizes,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Federal Reserve officials are closely watching employment numbers as they continue to try to bring inflation back down to 2%. After meeting last week, policymakers noted that “employment gains remain strong,” although this came before the April jobs report was released.
Markets expect the central bank to start cutting interest rates in September.
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2024-05-09 13:34:51
www.cnbc.com
