Last week, more Americans applied for unemployment benefits. While layoffs are still low, this was the fifth consecutive week of claims that topped 230,000. This is the highest figure in nearly six months.
The Labor Department reported that 235,000 applications for jobless assistance rose for the week ending July 2, up 4,000 over the previous week, and the highest since mid-January. The number of layoffs and first-time applications usually correlate with each other. The claim total hadn’t exceeded 220,000 since January, and was often below 200,000 in June.
For the week ending June 25, the total number of Americans receiving jobless benefits rose 51,000 over the previous week to 1,375,000. This number has been hovering around 50-year lows in recent months.
According to the numbers, a historically tight labor market is beginning to ease as businesses let go workers in economic uncertainty.
In a research note, Peter C. Earle, a research fellow at American Institute for Economic Research, stated that “the labor market appears to be in an state of flux.”
He stated that “the Federal Reserve’s decisions over the next six-months will determine whether there’s a gentle slope ahead or a steep cliff for economic growth, and employment over 2022 and 2023.”
The Labor Department reported Wednesday that U.S. employers had advertised fewer jobs for May amid signs of a weakening economy, but that overall demand for workers remains strong.
Employers had 11.3 million job opportunities at the end May, down from 11.7 million in April. The highest number of job openings in more than 20 years is 11.9 million. Nearly two job openings exist for every person who is unemployed.
These figures show the peculiarity of the post-pandemic economic system. Inflation is crushing household budgets, forcing them to cut back on spending. And growth is slowing down, increasing the risk that the economy will fall into recession. Companies are still trying to hire workers. Demand has been particularly strong in travel- and entertainment-related services.
Friday’s Labor Department report for May will be released. Analysts expect that more than 276,000 positions will be filled by employers. Although it is not a bad number, this would be the lowest monthly total in over a year.
Gus Faucher, chief economist at PNC, stated in a research note that “the open question is whether or not job growth will slow to a more sustainable pace consistent with labor force growth”
Jamie Cox, Harris Financial Group managing partner, stated that the Fed is “moving in our direction” with the layoff numbers.
Cox stated in a note that “It’s never good to see layoffs but the pressure on wages might have now peaked.” Cox stated that “a few more weeks will be required to see these numbers, and perhaps, just maybe financial conditions will be tight enough for the Fed to reduce the rate increase.”
Several prominent companies in tech have recently announced layoffs.
Elon Musk, CEO of Tesla Electric Cars, admitted that Tesla was cutting 10% of its salaried workforce or 3.5% of its total headcount.
Netflix laid off 150 employees in May, and another 300 in June. This was after the streaming entertainment company reported that it lost subscribers for the first-time in over a decade.
Carvana, an online automotive retailer, is cutting 2,500 jobs. This represents roughly 12% of its workforce. Redfin, an online real estate broker, is cutting 8% of its workforce due to pressure from a cooling housing market. Compass is also laying off 450 workers.
Coinbase Global, a crypto trading platform, is cutting around 1,100 jobs in response to falling cryptocurrency prices.
