Applications for unemployment benefits in the US saw one of their biggest jumps in recent times, rising by the most since the early months of the COVID pandemic, Bloomberg reported. The jump also came right after the previous week showed the lowest number of applications in more than three years. The previous week included Thanksgiving, which often makes the numbers uneven and harder to interpret.
Jobless claims jump in the US
According to Labor Department data released on Thursday, initial jobless claims increased by 44,000, reaching 236,000 for the week ending Dec. 6. This marks the biggest weekly rise since March 2020. Economists had expected a much smaller number, around 220,000.
Economists describe the job market right now as a “no-fire, no-hire” environment, meaning companies aren’t letting go of large numbers of workers, but they also aren’t hiring aggressively.
The report also showed that the number of people still receiving unemployment benefits dropped by 99,000 to 1.838 million for the week ending November 29. Some of the decline may be because many workers have used up all their benefits, which usually last for 26 weeks in most states. The jobless rate was 4.4% in September, the highest in four years.
Economists say the labor market has slowed down because there are fewer immigrant workers, tariffs have pushed up costs, and some companies are now replacing certain jobs with artificial intelligence tools.
However, despite the concerning figures, economists are not panicking. Instead, they pointed out that early-December filings always swing around because of seasonal patterns that are hard to adjust for. “The bulk of this week-to-week volatility is seasonal noise. On an underlying basis, nothing has changed, but if anything, we would have to say that initial claims are running slightly below the long-established trend,” Stephen Stanley, chief US economist at Santander U.S. Capital Markets, told Reuters. He also said the data contradicts Federal Reserve Chair Jerome Powell’s recent warning about a weakening job market.
Another economist, Nancy Vanden Houten of Oxford Economics, claimed that despite many high-profile layoff announcements, including from Amazon, claims have not moved much. She said, “It’s a little surprising that recent layoff announcements haven’t translated into a shift higher in initial claims.”
Markets react to mixed signals
Stocks on Wall Street traded mostly lower after the data came out. The dollar slipped, and US Treasury yields fell, Reuters reported. The Federal Reserve also cut its benchmark interest rate by 25 basis points this week, bringing the target range to 3.50%–3.75%. It was the Fed’s third rate cut of the year.
Powell, speaking after the decision, said the labor market “seems to have significant downside risks,” and spoke about a large overcount in earlier job-growth data. In September, the Bureau of Labor Statistics said the US had added 911,000 fewer jobs between April 2023 and March 2024 than previously estimated.