The number of Americans who applied for unemployment benefits jumped to its highest level in 10 months last week, another possible sign that the labor market is loosening under the weight of high interest rates.
Unemployment benefit claims for the week ending June 8 increased by 13,000 to reach 242,000, compared to the 229,000 from the previous week, the Department of Labor reported on Thursday. This is significantly higher than the 225,000 claims that analysts were expecting and the highest number since August 2023.
Applications are the highest since September.
The average number of requests in a four-week period, which compensates for some of the fluctuations from week to week, increased to 227,000, a rise of 4,750 compared to the previous week and the highest since September.
Weekly jobless claims are considered a representation of the number of layoffs in the United States in a given week and a signal of where the labor market is heading. They have remained at historically low levels since millions of jobs disappeared when the COVID-19 pandemic hit the United States in the spring of 2020.
Healthy job market
Although this week's figure may seem relatively high, it still remains within a range that reflects a healthy labor market. However, sustained layoffs at this level could have some influence on Federal Reserve officials, who closely monitor the labor market when considering interest rate decisions.
The Federal Reserve increased its benchmark interest rate 11 times starting in March 2022 in an attempt to extinguish the high inflation of four decades that solidified after the economy recovered from the COVID-19 recession of 2020. The Fed’s intention was to cool down an overly active labor market and reduce wage growth, which can fuel inflation.