The number of Americans filing new jobless claims rose at a moderate pace last week, while total new claims reached a 10-month high by the end of November, indicating a slowdown in the labor market.
However, there are still more jobs in the labor market than people looking for them, prompting the Federal Reserve to keep raising interest rates in its efforts to fight inflation. The labor market remained resilient in the face of growing recession risks due to the Fed’s aggressive approach to monetary policy.
Initial jobless claims increased by 4,000 to a seasonally adjusted 230,000 for the week ended December 3. Growth coincided with the expectations of economists.
Unadjusted claims jumped 87,113 to 286,436 last week, led by strong gains in California, New York, Georgia and Texas. There was also notable growth in Illinois, Pennsylvania, and Washington.
Last week, the US government reported that non-farm payrolls increased by 263,000 in November. Economists say tech companies are cutting headcount after overhiring during the coronavirus pandemic, noting that small companies are still in dire need of workers.
The Fed wants to slow down the labor market to bring down inflation and has raised interest rates by 375 basis points this year from almost zero to a range of 3.75% to 4.00%, the fastest rate hike since the 1980s.
The claims report also showed that the number of people receiving benefits after the first week of assistance rose from 62,000 to 1.671 million in the week ended Nov. 26, the highest since February.