Federal officials reported on Thursday that there was an increase in new applications for unemployment benefits of 5,000 from the week prior, pointing to a cooling labor market.
In a news release on April 20, the Labor Department cited having received 245,000 new jobless claims for the week ending on April 15. It marked a four-week moving average of 1,827,250 applications, the highest seen since December 18, 2021, when it was 1,838,000.
This upward trend in jobless claims is a sign that the labor market has begun to react to the Federal Reserve’s tightening monetary policy meant to combat inflation, per the Washington Examiner.
Signs of a softening labor market have appeared elsewhere.
A news release from the Labor Department on April 7 showed that 236,000 new jobs were added in March. This is lower than the six-month average of 334,000.
Wage growth has also decelerated, with a 0.3% increase reported in average hourly earnings. This brought the annual increase to 4.2%, its lowest since June 2021, when inflation hit.
Until recently, the labor market had appeared unusually robust. While the definitions of a recession vary, a number of economic indicators including unemployment, GDP, and CPI are typically monitored for signs of crisis, as The Dallas Express previously reported.
The recent softening of the labor market will likely add pressure on Americans who were already feeling financially burdened by inflationary pressures and falling home values, per The Dallas Express.
Yet projections from Oxford Economics economists have suggested that the downturn in the labor market will not be too severe.
“Initial claims stayed on their upward trajectory, indicating labor market tightness is easing modestly, but layoffs are far from broad-based and have not caused a spike in the unemployed,” explained Oren Klachkin, lead economist for the U.S. at Oxford Economics, per Business Insider.
As The Dallas Express reported, most mass layoffs have been hitting the tech sector. Yet the writing may also be on the wall for the manufacturing sector, which is beginning to slump in response to decreased demand, per Reuters.
The Philadelphia Fed logged the lowest level of factory activity seen in the mid-Atlantic region since May 2020.
Amid all this, the Fed is expected to continue its fastest monetary policy tightening cycle since the 1980s and raise rates again during its next meeting on May 3, per Reuters.
