Jobless Claims Rise, Continuing Benefits Reach Three-Year High
Jobless claims applications increased by 6,000 to 223,000 for the week ending January 18th, according to the Labor Department. This surpasses analyst expectations of 219,000 new applications.
Weekly unemployment claims serve as an indicator of layoffs. The total number of Americans receiving unemployment benefits rose by 46,000 to 1.9 million for the week ending January 11th, marking the highest level since November 2021.
The increase in continuing claims suggests that some individuals receiving benefits are facing difficulties securing new employment. This may indicate a softening demand for workers despite the economy's overall strength. The four-week average of continuing claims is approximately 100,000 higher than a year ago.
Despite these signs of labor market weakness, job opportunities remain ample and layoffs are historically low. The Labor Department previously reported strong job growth and a decline in unemployment in December, with employers adding 256,000 jobs and the unemployment rate dropping to 4.1%.
The Federal Reserve may be less inclined to cut interest rates further after issuing three cuts in late 2024, given the robust job growth data. This indicates that the economy is transitioning into a post-COVID era of steady growth, higher interest rates, and moderately elevated inflation.
Although layoffs remain low by historical standards, several high-profile companies have announced job cuts recently. Meta, the parent company of Facebook, laid off 5% of its workforce, while Brown-Forman, the maker of Jack Daniel's, is reducing its workforce by approximately 12%. Other major companies, such as GM, Boeing, Cargill, and Stellantis, have also announced layoffs in late 2024.