The U.S. labor market experienced some softening during the second week of November, with weekly jobless claims hitting a three-month high.
The number of Americans filing initial claims for unemployment rose by 13,000 to a seasonally adjusted 231,000 for the week ending November 11, the highest since August, according to the U.S. Labor Department’s weekly jobless claims report released Thursday.
Overall, the 231,000 initial claims filed in the week were sharply above the 220,000 market forecasts from economics polled by Reuters.
“The data suggest that the labor market might be cooling but that conditions are not particularly bad,” said Daniel Silver, a JPMorgan economist in New York, per Reuters. “The initial claims data can be volatile, particularly around holidays like Veterans Day, so we never want to overreact to just one week of data.”
The seasonally adjusted insured unemployment, also known as “continuing claims,” rose by an upwardly revised 32,000 to 1,865,000 during the week ending November 4, “the highest level since November 27, 2021,” said the Labor Department in the report.
This would suggest that many employers are putting a pause on hiring ahead of 2024 or that people are genuinely struggling to find employment.
“There is little prospect for re-energized labor demand on the near-term horizon as interest rates are set to remain higher for longer,” said PNC Financial Senior Economist, per Reuters. “Fading consumer demand entering 2024 should thus place upward pressure on jobless claims going forward as those enduring layoffs and new job seekers find opportunities less readily available.”
Despite the Federal Reserve receiving positive consumer price data this week, monetary policymakers have said rates will remain elevated until inflation returns to the U.S. Central Bank’s 2% goal over time.
The growing number of people filing for unemployment benefits points toward a softening labor market, which underscores the Fed’s goal of slowing the economy to get inflation fully under control.
According to the report, the states with the largest increases in initial claims for the week ending November 4 were California (+2,910), New York (+2,245), Pennsylvania (+1,704), New Jersey (+1,689), and Texas (+1,522).