The number of Americans filing new applications for unemployment benefits rose more than expected last week, indicating further deterioration in the labour market, Reuters reports.
The Labour Department said on Thursday that initial jobless claims rose by 13,000 to a seasonally adjusted 231,000 in the week ended November 11. Economists had previously forecast that claims would be 220,000 in the latest week.
Rising interest rates curb demand, labour market cools. In October, the unemployment rate rose to 3.9 per cent and job growth slowed. The situation remains quite tight, given that there were 1.5 job openings for every unemployed person in September.
Goldman Sachs economists said they did not see last month’s rise in the unemployment rate as a bad omen, noting that the rise in the unemployment rate since April was not due to a decline in employment but solely due to an increase in the labour force.
Weakening labour market conditions, as well as declining inflation and consumer spending have reinforced expectations that the Fed’s monetary tightening cycle is over. Financial markets even expect an interest rate cut next May, according to CME Group’s FedWatch tool. Since March 2022, the Fed has raised the interest rate by 525 basis points to the current range of 5.25%-5.50%.
The number of people receiving benefits after the first week of assistance, a proxy for employment, rose by 32,000 to 1.865 million in the week ended 4 November, the claims report showed. So-called “continuing applications” have been rising since September.
Most economists believe the rise has more to do with difficulties in seasonally adjusting the data than with significant changes in the labour market. They expect this problem to be fixed when the government revises the data next spring. Lou Crandall, chief economist at Wrightson ICAP in New York, said:
It is not a reason to expect a materially higher unemployment rate in the November monthly jobs report.
