US jobless claims hit six-month high as labour demand cools
The number of people applying for unemployment aid in the US reached the highest level in more than six months last week, amid growing signs the historically tight labour market could be cooling.
In the week to July 30, there were 260,000 initial jobless claims on a seasonally adjusted basis, according to labour department data released on Thursday. That was the largest weekly tally since mid-January and slightly above economists’ expectations of 259,000 claims. The claims serve as a proxy for lay-offs.
The previous week’s claims were revised down from 256,000 to 254,000, while the four-week average, which smooths week-by-week volatility, rose to 254,750, its highest point since November.
Economists at Oxford Economics said there was a risk that jobless claims would continue to “drift” higher as labour market conditions cool, but added this should not be a cause for alarm.
“We don’t anticipate a sharp rise from current levels any time soon as demand for workers continues to outstrip supply,” said Oxford lead US economist Nancy Vanden Houten.
Companies across sectors including technology, digital assets and retail have announced hiring slowdowns and dismissals in recent weeks amid rising inflation and higher input costs.
Walmart announced on Wednesday it would cut approximately 200 corporate roles across various departments as part of a restructuring. It comes after the company issued its second profit warning in just over two months and has resorted to aggressive price cuts as high inflation hits consumer demand for goods.
Brokerage Robinhood cited the “extremely challenging macro environment”, when it said earlier this week it would lay off almost a quarter of its staff — roughly 780 employees — as the retail trading boom loses steam amid a decline in customer activity. That follows a 9 per cent cut of full-time staff in April.
Streaming platform Netflix, social media company Twitter and electric carmaker Tesla have all also announced lay-offs in recent weeks, while tech giants Meta and Alphabet announced they would slow down their hiring for the rest of the year.
Demand for US workers decreased in June with the number of job openings down to 10.7mn from 11.3mn in May, according to the Job Openings and Labor Turnover Survey released earlier this week by the labour department. Despite the decline, the number of workers who were laid off was little changed at 1.3mn and the number of workers voluntarily quitting their jobs is still at above pre-coronavirus pandemic levels at 4.2mn in June even as the economy slows.
The increase in claims could be an early sign of cooling demand for labour, but it’s not yet a concrete signal, Joshua Shapiro, chief US economist at MFR, said in a note. While companies face cost cuts, they are “recognising how difficult it has been to attract and keep qualified workers”.
The number of Americans actively receiving unemployment aid was 1.42mn in the week ending July 23. The previous week’s figure was revised up to 1.37mn from 1.36mn.
Economists expect the unemployment rate to hold steady at 3.6 per cent when July’s employment report is released tomorrow, according to a Bloomberg survey.