The numbers: The number of Americans who applied for unemployment benefits last week was flat at 264,000, leaving it at a nearly two-year high and possibly signaling some decay in the U.S. labor market.
New jobless claims from two weeks ago were revised slightly to 264,000 from an original 262,000, government data showed.
California, Connecticut and New Jersey were the only states to post sizable increases, however. New claims fell in most other states.
Unemployment claims typically rise when the economy weakens and a recession approaches. They’ve increased since the beginning of the year but are still quite low.
Key details: A sharp increase in jobless claims in the past month has fueled talk that the labor market is finally feeling the effects of the rising interest rates orchestrated by the Federal Reserve to quench high inflation.
New filings have risen above 260,000, from around 230,000 in early May.
The unadjusted figures tell a similar story. Actual jobless claims totaled 250,000 in the latest week, up from around 200,000 as recently as the beginning of May.
Still, not every state is showing a steady increase. Most of the rise in new claims last week was concentrated in California, with Connecticut and New Jersey also reporting sizable gains.
Yet new jobless claims also fell in 36 of the 53 states and territories that report these figures to the federal government.
The number of people collecting unemployment benefits in the U.S., meanwhile, is telling a somewhat different story. That number dipped by 13,000 to 1.78 million. It has now fallen in four of the past six weeks, after hitting a one-and-a-half-year high of 1.83 million in April.
“The diverging momentum in initial claims and continuing claims raises the obvious question about which data is telling the right story, and how long can this condition persist,” said Thomas Simons, U.S. economist at Jefferies.
Further complicating the picture has been another surge in fraudulent filings this year. That could help explain the divergence between the recent rise in new applications for benefits but not in ongoing claims.
Big picture: Job openings and hiring have slowed since last year and layoffs have risen — a sign to some economists of an impending recession.
Yet by virtually any measure, the labor market is still robust. The U.S. is adding more than 200,000 jobs a month, unemployment is extremely low at 3.7% and wages are rising rapidly. The rise in claims stands in stark contrast.
The Fed is worried that a tight labor market will make it harder to get inflation fully under control. After a “pause” in June, the central bank is primed to raise interest rates again to slow the economy even further to ease price pressures.
Looking ahead: “Our view remains that layoffs will rise less dramatically than normally might occur [in a slowing economy], as companies do all they can to avoid shedding workers who have been incredibly difficult to recruit and retain,” said chief economist Joshua Shapiro of MFR Inc.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open lower in Thursday trades.
This story originally appeared on Marketwatch
