Claims for jobless benefits in the US dropped sharply last week, after a period in which they settled at a somewhat record number of claims.
The Labor Department said on Thursday, June 29, that the number of Americans filing for unemployment benefits declined by 26,000 to 239,000 in the week ending June 24. Economists had anticipated that higher claims figures, which had held at around 260,000 for the previous three weeks, would remain above that level.
In a report by AP News, Contingent Macro Research analysts wrote in a note to clients on Thursday, "We have no specific explanation for this sudden dip, after three straight weeks in a narrow range from 262K to 265K, but observations for individual weeks always have to be viewed with skepticism, especially when they move against the established trend in claims and other data."
Claims have increased by 1,500 to a four-week moving average of 257,500, which helps to smooth out weekly swings.
The number of people who file for unemployment benefits each week is often believed to be indicative of the number of people who were laid off that week.
In an Effort to Combat Inflation
Since the end of 2021, weekly unemployment claims have been between the high 100,000 and low 200,000 mark, but in the past three weeks, that range has edged closer to 300,000. However, according to Fed experts, an increase in the unemployment rate much over 4% is necessary to reduce inflation, so this may not have been enough.
The government also released its estimate for economic growth in the US for the first three months of the year on Thursday, which was much higher than the prior estimate of 1.3%, as reported by CNBC. As a result, and in light of the robust job market, the Fed is expected to implement more rate hikes before the year ends in an effort to combat inflation.
Positive Labor Market Outlook
Recent high-profile layoffs have been concentrated in the technology industry, where many businesses admit they recruited too quickly in response to the COVID-19 pandemic.
Since the outbreak struck in the spring of 2020 and eliminated over 20 million employees in the US, the economy has been rapidly creating new positions. Because of the favorable labor climate, Americans have experienced unprecedented job stability.
Even though the unemployment rate increased to 3.7%, the unanticipated addition of 339,000 jobs by US companies last month paints a mainly favorable picture of the labor market.
The number of job opportunities listed by companies in April rose to 10.1 million, up from 9.7 million in March and the highest monthly total since January. Notably, economists predicted a fall in job openings.
