The Department of Labor reported that initial filings for unemployment benefits rose by 28,000 to a seasonally adjusted 261,000 for the week ending on June 3, which could indicate a softening labor market despite a year of interest rate hikes. The four-week moving average of claims increased by 7,500 to 237,250, the highest recorded since April 29. Continuing claims, which measure those who have filed for multiple weeks, fell to 1.757 million, a decrease of 37,000. The unadjusted total was 219,391, a 5% increase from the previous week, and seasonal factors would have indicated a 6% decrease. As of May 20, a total of 1.635 million people were receiving jobless benefits, an increase of 27.4% from a year ago.
Though economists say one week’s worth of data is not enough to predict a significant increase in claims, other indicators have shown a rise for some time. Pantheon Macroeconomics’ chief economist, Ian Shepherdson, states “higher claims… are consistent with the ongoing deterioration in credit availability and the lagged effect of the Fed’s tightening.” This report also comes less than a week before the Federal Reserve meets to discuss interest rates. The market expects the Fed to skip a rate hike, as a less robust labor market reduces their pressure to tighten monetary policy. Since March 2022, the Fed already raised its benchmark borrowing rate 10 times. Though the labor market demonstrated resilience with nonfarm payrolls increasing by 1.6 million in 2023, the May jobs report revealed some decline in the unemployment rate, rising by 0.3 percentage points to 3.7%. Furthermore, inflation has not yet fallen below the Fed’s 2% target. The Bureau of Labor Statistics will release its last look at inflation data before the meeting with the consumer price index report for May on Tuesday, which is expected to rise by 0.1% on a monthly basis.
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