West News Wire: Despite efforts by the Federal Reserve to cool the economy and job market in its fight against inflation, the number of Americans applying for unemployment benefits increased to its highest level in more than a year.
The Labor Department said on Thursday that jobless claims in the U.S. for the week ending April 8 increased by 11,000 to 239,000 from the prior week. It’s the highest number since 251,000 people applied for jobless benefits in January 2022.
In order to smooth out some of the week-to-week variations, the claims’ four-week moving average increased by 2,250 to 24,000. The number is the highest since November 2021.
The Labor Department released updated estimates of the number of weekly applications for unemployment benefits last week using a new technique to account for seasonal fluctuations. The new formula, which led to an increase in its weekly tally, is intended to more accurately capture seasonal patterns in job losses.
Applications for unemployment benefits are broadly seen reflective of the number of layoffs in the U.S.
The job market seems to be finally showing some signs of softening, more than a year after the Federal Reserve began an aggressive campaign to cool inflation by raising its benchmark borrowing rate nine times in about a year.
In its latest quarterly projections, the Fed predicts that the unemployment rate will rise to 4.5% by year’s end, a sizable increase historically associated with recessions.
Also last week, the Labor Department reported that U.S. job openings slipped to 9.9 million in February, the fewest since May 2021.
Some details from Friday’s Labor Department report raised the possibility that inflationary pressures might be easing and that the Fed might soon decide to pause its rate hikes. Average hourly wages were up 4.2% from 12 months earlier, down sharply from a 4.6% year-over-year increase in February.
The government said consumer prices rose just 0.1% from February to March, down from 0.4% from January to February and the smallest increase since December. However, prices are still rising fast enough to keep the Federal Reserve on track to raise interest rates at least once more, beginning in May.
Layoffs have been mounting in the technology sector, where many companies hired aggressively during the pandemic. IBM, Microsoft, Salesforce, Twitter and DoorDash have all announced layoffs in recent months. Amazon and Facebook have each announced two sets of job cuts since November.
About 1.81 million people were receiving jobless aid the week that ended April 1, a decrease of 13,000 from the week before. That number is close to pre-pandemic levels.
