Could the labor market finally be cooling off?
The Department of Labor said initial jobless claims rose by 22,000 to a seasonally adjusted 264,000 last week, the highest level of claims since 2021. The four-week average of claims, which many economists view as a better indicator of labor market trends, increased by 6,000 to 245,000.
The increase was larger than expected. The median forecast was for 245,000 claims, according to Econoday. Forecasts among those surveyed ranged from 240,000 to 250,000.
The Federal Reserve has said that softening demand for labor is a key aim of its strategy to tame inflation by hiking interest rates. Progress on that front has been slower than expected. The U.S. economy added 253,000 jobs in April, the biggest increase since January. The unemployment rate fell to 3.4 percent.
Continuing claims, which get reported with a week’s delay, rose by 12,000 to 1,813,000, a low level by historical standards. This indicates that many of those who have lost their jobs are quickly finding new employment.