The number of people seeking unemployment help in the United States hit its highest level in more than six months last week, amid growing signs that the historically tight labor market may cool.
In the week leading up to July 30, there were 260,000 initial jobless claims on a seasonally adjusted basis, according to Labor Department data released Thursday. This was the highest weekly tally since mid-January and slightly above economists’ expectations of 259,000 requests. The requests serve as a proxy for layoffs.
The previous week’s bids were revised down from 256,000 to 254,000, while the four-week average, which mitigates week-to-week volatility, rose to 254,750, the highest point since November.
Economists at Oxford Economics said there is a risk that jobless claims will continue to “drift” above cold labor market conditions, but added that this should not be a cause for alarm.
“We do not expect a sharp rise from current levels at any time as demand for workers will continue to outstrip supply,” said Nancy Vanden Houten, US chief economist at Oxford.
Companies across industries including technology, digital assets and retail have announced slowdowns in hiring and layoffs in recent weeks due to rising inflation and higher input costs.
Walmart announced Wednesday that it would be cutting about 200 corporate roles across various departments as part of a restructuring. It comes after the retailer issued its second profit warning in just over two months and resorted to aggressive price cuts as high inflation affects consumer demand for goods.
Brokerage agency Robinhood cited “the extremely challenging macro environment” when earlier this week it said it would lay off nearly a quarter of its staff – around 780 employees – as the retail boom lost steam in. due to the decline in customer activity. This follows a 9% cut in full-time staff in April.
Streaming platform Netflix, social media company Twitter, and electric carmaker Tesla have also announced layoffs in recent weeks, while tech groups Meta and Alphabet have announced they will slow their hiring for the rest of the year.
Demand for U.S. workers declined in June as the number of job openings dropped to 10.7 million from 11.3 million in May, according to the Job Openings and Labor Turnover Survey released earlier this week by the Department of Labor. Despite the decline, the number of laid off workers remained unchanged at 1.3 million and the number of workers who voluntarily left their jobs is still above pre-coronavirus pandemic levels at 4.2 million in June, although the economy slows down.
The increase in claims could be a first sign of cooling demand for labor, but it is not yet a concrete sign, Joshua Shapiro, chief US economist at MFR, said in a statement. As companies face cost cuts, they are “recognizing how difficult it has been to attract and retain skilled workers.”
The number of Americans actively receiving unemployment aid was 1.42 million in the week ending July 23. The previous week’s figure was revised from 1.36 million to 1.37 million.
Economists expect the unemployment rate to hold steady at 3.6% when the July employment report is released on Friday, according to a Bloomberg poll.