Although more Individuals than ever before last week applied for unemployment benefits, layoffs remained historically low as the labor market remained mostly unaffected by the Federal Reserve’s interest rate increases.
The Labor Department said on Thursday that claims for unemployment insurance increased by 21,000 to 211,000 in the U.S. for the week ending March 4 from 190,000 the week before. For the first time in eight weeks, more than 200,000 claims were received.
The claims’ four-week moving average, which smooths out some of the weekly fluctuations, increased by 4,000 to 197,000, staying below the 200,000 mark for the sixth consecutive week.
Unemployment benefit requests are regarded as a stand-in for layoffs.
The Fed increased its benchmark lending rate by 25 basis points last month, the ninth consecutive rate increase in its ongoing fight against persistent inflation. The benchmark rate the central bank sets is currently between 4.5% and 4.75%, the highest level in 15 years. According to some analysts, three or more rises are expected, raising the lower end of this rate to 5.5%.
Rate rises by the Fed are intended to chill the economy, the labor market, and wages, which will therefore restrain prices.
But none of those things have occurred thus far, at least not in the way that the central bank had anticipated.
The economy is expanding and creating jobs at a good clip, but inflation is still higher than the Fed’s 2% target.
The government announced last month that companies added more jobs than anticipated in January, adding 517,000 and that the unemployment rate fell to 3.4%, the lowest level since 1969.
According to analysts, the U.S. economy generated another 208,000 jobs in February, according to Friday’s jobs data.
By the end of this year, the unemployment rate is expected to increase significantly to 4.6%, a level typically associated with recessions, according to Fed policymakers’ predictions.
Although the U.S. labor market is still robust, there have been increasing layoffs in the technology industry because many businesses overhired following the epidemic boom. In recent months, layoffs have been disclosed by IBM, Microsoft, Amazon, Salesforce, Facebook parent Meta, Twitter, and DoorDash.
The Fed’s increases in interest rates have also negatively impacted the real estate market. Home sales have decreased for 12 months due to higher mortgage rates, currently over 6%. That matches the rate increases the Fed has been making since last March.
In the week ending on February 25, 1.72 million persons were receiving unemployment benefits, a rise of 69,000 from the previous week.