The number of people in the United States filing for unemployment benefits spiked last week to the highest level since the end of 2021, suggesting that rising interest rates are starting to take a toll on the job market.
Initial claims for state unemployment benefits increased by 22,000 in the week ending May 6, to a seasonally adjusted 264,000, the highest reading since October 2021, the Labor Department said Thursday.
The economists surveyed by Reuters they had forecast 245,000 applications for the past week.
Claims had leveled off after rising in March, when layoffs in the tech sector at the end of 2022 filtered through the data. There were also job cuts in rate-sensitive sectors such as housing.
Claims, which remain below the 270,000-300,000 level that economists say would indicate a deterioration in the labor market, are expected to rise sharply in the second half of the year as the cumulative and lagged effects of the Federal Reserve rate hikes spread through the economy.
The labor market remains tight, with 1.6 job offers for every unemployed person in March, well above the 1.0-1.2 range that is consistent with a labor market that is not generating much inflation.
The Fed has raised interest rates by 500 basis points since March 2022, to the 5-5.25% level, signaling last week that it may pause its fastest monetary-tightening campaign since the 1980s.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased by 12,000 to 1.813 million during the week ending April 29, the report said.
So-called continuing claims remain low compared to historical levels, as some of the laid-off workers are quickly finding employment.
Connect with the Voice of America! Subscribe to our channel Youtube and activate notifications, or follow us on social networks: Facebook, Twitter and Instagram.
