By Lucia Mutikani
WASHINGTON – The number of Americans filing new jobless claims unexpectedly rose last week, hitting a four-month high, which could signal some cooling in labor demand amid tightening financial conditions.
The job market remains tight, however, with Thursday’s Labor Department report showing the number of people on payrolls unemployed in early May at the lowest since late 1969.
The aggressive monetary policy of the Federal Reserve in its fight against inflation has triggered a sell-off in equities and has boosted yields on US Treasury bonds.
Despite last week’s surge in applications, a shortage of workers could curb layoffs. At the end of March there were a record 11.5 million job vacancies.
“The recent layoff announcements are worth watching to see if there is a shift in companies’ hiring decisions,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York. “For now, demand for labor appears to remain strong and, combined with lagging supply, should limit the number of layoffs.”
Initial claims for state jobless benefits rose by 21,000 in the week ending May 14, to a seasonally adjusted figure of 218,000, the highest level since January. Economists polled by Reuters had forecast 200,000 claims for the latest week.
Jobless claims have held steady since hitting a 53-year low of 166,000 in March. The rapid tightening of the labor market is generating strong wage increases that are helping to fuel general inflation in the economy.
The US central bank has raised its official interest rate by 75 basis points since March. The Fed is expected to raise interest rates by half a percentage point at each of its upcoming meetings in June and July.
Subsidy claims are down from an all-time high of 6.137 million in early April 2020. Last week’s data covered the period during which the government surveyed employers for the nonfarm payrolls portion of the employment report. of May.
Requests increased between the April and May survey period. Payrolls increased by 428,000 in April, the 12th straight month of employment gains above 400,000.
Next week’s data on unemployment in mid-May will shed more light on the state of job growth this month.
The number of people receiving benefits after a first week of aid fell by 25,000 to 1.317 million during the week ending May 7. This is the lowest level of so-called continuous requests since December 1969.
There are also signs that the manufacturing sector is slowing down. A separate report from the Philadelphia Fed showed on Thursday that its business conditions index fell to a reading of 2.6 in May from 17.6 in April.
However, there were increases in measurements of new orders, unfulfilled orders and shipments at factories in the region that encompasses eastern Pennsylvania, southern New Jersey and Delaware. Inflationary pressures in factories also appear to have peaked.
The Philadelphia Fed’s six-month business conditions index fell to a reading of 2.5 this month from 8.2 in April. Its six-month capital spending ratio fell to 9.6 from a reading of 19.9 in the previous month.