As the labor market continues to resist the Federal Reserve’s efforts to cool it by raising interest rates, the number of Americans asking for unemployment benefits decreased once more last week.
The Labor Department said on Thursday that U.S. applications for unemployment benefits decreased by 12,000 to 237,000 for the week ended July 8 from 249,000 the previous week.
The claims’ four-week moving average, which helps to even out some of the week-to-week fluctuations, decreased by 6,750 to 246,750.
Applications for unemployment benefits are used as a proxy for the number of layoffs within a given week.
The week that concluded on July 1 saw a total of 1.73 million people get unemployment benefits, which is 11,000 fewer than the week before.
The number of unemployed claims appears to have risen beyond 260,000 for three weeks in late May and early June.
Even so, the Fed’s decision to forgo raising its benchmark interest rate at its next meeting may not have been influenced by that hike.
Since the COVID-19 pandemic struck in the spring of 2020, more than 20 million jobs have been lost in the U.S. economy at a dizzying rate.
Due to unusually strong job security and employer reluctance to lay off employees, Americans have experienced a favorable labor market.
Employers in the United States continue to increase employment at a solid rate each month, frequently surprising economists and presenting a generally positive image of the labor market and its 3.6% unemployment rate.
According to Fed experts, for inflation to decrease, the jobless rate must increase by far more than 4%. Despite the Federal Reserve’s vigorous rate-hiking campaign to combat persistent inflation not seen since the early 1980s, the U.S. economy has largely remained resilient.
The rate increases have gradually assisted in reducing inflation, which dropped last month to its lowest level since the beginning of 2021. The government said two weeks ago that the U.S. economy expanded at a significantly faster rate, 2% annually, from January through March.
For the first time in 15 months, the Fed decided not to raise the benchmark borrowing rate in June, but several officials have stated that they anticipate raising rates by another half-point by the end of the year.
A lot of high-profile layoffs have recently occurred, primarily in the technology industry, where many businesses concede they employed too many staff during the pandemic.
In recent months, layoffs have been announced by IBM, Microsoft, Salesforce, Twitter, Lyft, LinkedIn, Spotify, and DoorDash, among others. Since November, two rounds of job losses have been disclosed by Amazon and Facebook’s parent company, Meta.
Aside from the computer industry, recent layoff announcements also included McDonald’s, Morgan Stanley, and 3M.
Because of increased borrowing rates, the manufacturing and real estate sectors have been shrinking. Higher interest rates have also been partially blamed for three bank collapses.