By Christian Robles
In a troubling development, filings for unemployment benefits by workers have risen in the past week, suggesting a gradual cooling of the once robust labor market. According to the Labor Department, initial claims, which are used as a proxy for layoffs, reached a seasonally adjusted 248,000 for the week ended August 5. This comes on the heels of the recent shutdown of Yellow, a prominent trucking company in the U.S., jeopardizing a staggering 30,000 jobs. It is worth noting that claims filings averaged around 220,000 in 2019, when the labor market was similarly stable.
The four-week moving average of weekly claims, which helps to smooth out the volatility in the weekly figures, rose to 231,000.
These increases in initial claims are reflective of job cuts that have taken place at the start of this year in various sectors such as technology, finance, and real estate.
Amidst these developments, the Federal Reserve has been actively raising interest rates to their highest point in 22 years, aiming to temper the U.S. economy and combat inflation. However, the higher interest rates have coincided with a slowdown in job and wage growth compared to last year. In July alone, U.S. employers added a modest 187,000 jobs, causing the unemployment rate to decline to 3.5%. Average hourly earnings also saw growth of 4.4% from the previous year in July, although slightly down from last year’s rate.
Meanwhile, continuing jobless claims, which highlight the number of individuals requesting an additional week of unemployment benefits, slightly decreased to a seasonally adjusted 1.684 million for the week ending July 29. It’s important to note that continuing claims data is reported with a one-week lag.