The number of Americans who signed up for unemployment benefits rose last week to the highest level since November, though the U.S. job market continues to show signs of strength.
Applications for jobless aid climbed by 14,000 to 262,000 and have now risen five out of the last six weeks, the Labor Department reported Thursday. The four-week average for claims, which smooths out weekly ups and downs, rose to 252,000, also the highest since November.
The number of Americans collecting traditional unemployment benefits increased to 1.43 million in the last week of July — the highest number since early April.
“Initial claims and continuing claims have inched higher for the last four months and suggest that the labor market will likely slow further throughout the back half of this year,” Jeffrey Roach, chief economist for LPL Financial, said in a note.
Unemployment applications are a proxy for layoffs and are often seen as an early indicator of where the job market is headed.
So far this year, the U.S. labor market has been remarkably strong and resilient, even as overall economic growth weakens and in the face of rising interest rates and weak economic growth. Hiring surged in July, with employers adding 528,000 jobs — more than double what forecasters had expected — while the unemployment rate dipped to a 50-year low of 3.5%.
The United states recovered with unexpected strength from 2020’s COVID-19 recession, leaving businesses scrambling to find enough workers. But the economy still faces challenges, made more severe by the Federal Reserve’s determination to raise interest rates to cool the highest inflation in four decades. Thanks in part to higher borrowing costs brought on by the rate hikes, the economy contracted in the first half of the year — one rule of thumb for the onset of a recession. But a recession is inconsistent with the pace of hiring in the past six months.
“[T]he labor market remains tilted it job seekers’ favor,” economists at Oxford Economics said in a note. “The dearth of labor supply means it’s more likely that companies will temper their hiring rather than resort to layoffs”
