Unemployment claims rise to 240,000, highest since August

The number of Americans applying for unemployment benefits rose to its highest level since August, although it remains low by historical standards.

Some 240,000 people applied for unemployment assistance last week, up 17,000 from the previous week, the Labor Department reported Wednesday. The four-week moving average for claims, which dampens week-to-week volatility, rose 5,500 to 226,750.

Unemployment benefit claims are a proxy for layoffs. Although job cuts remain low by historical levels, that could change as the Federal Reserve raises interest rates to calm inflation.

The Fed has already raised its benchmark interest rate six times since March, depressing stock market valuations and causing the housing market to crash under pressure from mortgage rates that have doubled in the past year. Many economists expect the United States to slip into a recession next year as rising borrowing costs slow economic activity.

In recent weeks, major tech companies, including Amazon, MetaInstantaneous, resume and Twitter are cutting tens of thousands of employees as they adjust to a slower growth environment. A continued bullish campaign by the central bank could lead to even more cuts in the fast-growing sector.

β€œAll businesses benefit from low borrowing costs, but technology in particular has benefited from low borrowing costs because so much of their revenue is projected into the future. These are growing businesses,” said Nela Richardson , chief economist at ADP, the payroll processor. .

She added: “Tech companies represent only 2% of employment in the United States, while tech layoffs affect individual companies and their workers, employment in the broader sector represents only a very small percentage of the overall labor market.”

Mass layoffs at Meta point to Silicon Valley woes


Overall hiring remained strong, with employers adding 261,000 jobs last month and creating an average of nearly 407,000 per month this year – on track to make 2022 the second-best year for hiring (after 2021) in government records dating back to 1940. There are nearly two job openings for every unemployed American. The unemployment rate is 3.7%, a few tenths above a half-century low.

Weekly new jobless claims were extremely low at the start of this year – remaining below 200,000 for much of February, March and April. They started to rise in late spring and reached 261,000 in mid-July before falling again.

“We expect layoffs to increase as demand weakens in response to higher interest rates,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a research report. . “However, this move is likely to be gradual given that companies are still grappling with labor shortages and will be reluctant to downsize.”

The Labor Department said Wednesday that 1.55 million people were receiving unemployment assistance the week ending Nov. 12, up 48,000 from the previous week.

CBS News’ Irina Ivanova contributed reporting.

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