Jobless claims rise more than expected as labor market starts to cool
Applications for unemployment benefits edged higher as Fed raises rates higher
The Fitz-Gerald Group principal Keith Fitz-Gerald and Sarge986 president Stephen Guilfoyle discuss the stock markets volatile reaction to the Fed's rate hike on 'The Claman Countdown.'
The number of Americans filing first-time unemployment benefits rose more than expected last week, a sign the labor market is starting to cool as the Federal Reserve raises interest rates at the fastest pace in decades.
Figures released Thursday by the Labor Department show applications for the week ended Oct. 1 climbed to 219,000 from the downwardly revised 190,000 recorded a week earlier. That is in line with the 2019 pre-pandemic average of 218,000 claims.
It marks the highest level for jobless claims in five weeks and is well above the median forecast for 203,000 new applications.
If unemployment benefits continue to climb, it could be a sign that employers are laying off workers as consumers pull back on spending and the economy grinds to a halt. Other data published this week shows that job openings plummeted to the lowest level since early in the pandemic.
THE FED'S WAR ON INFLATION COULD COST 1M JOBS
Recruiters speak with job seekers during a Miami-Dade County job fair in Miami, Florida, U.S., on Thursday, Dec. 16, 2021. (Eva Marie Uzcategui/Bloomberg via Getty Images / Getty Images)
Continuing claims, or the number of Americans who are consecutively receiving unemployment aid, continued to inch higher, edging up to 1.36 million for the week ended Sept. 24. One year ago, nearly 4.17 million Americans were receiving unemployment benefits.
The weaker-than-expected data comes as the Federal Reserve tries to crush runaway inflation with the most aggressive rate hikes in decades. Policymakers have already approved five straight rate increases and have signaled that more hikes are to come as they try to cool the economy, and the labor market.
Updated projections released in September show that Fed officials expect unemployment to climb to 4.4% by the end of next year, up from the current rate of 3.7%.
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That is significantly higher than in June when policymakers saw the jobless rate inching up to 3.7%. Chair Jerome Powell conceded during the post-meeting press conference that higher rates could "give rise to increases in unemployment."
A man wearing a mask walks past a "now hiring" sign on Melrose Avenue amid the coronavirus pandemic on April 22, 2021 in Los Angeles, California. (Photo by Alexi Rosenfeld / Getty Images)
"We think we need to have softer labor market conditions," Powell said. "And if we want to set ourselves up really light the way to another period of a very strong labor market, we have got to get inflation behind us. I wish there were a painless way to do that. There isn't."
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The data precedes the release of the September jobs report on Friday morning, which is expected to show that employers hired 250,000 workers following a gain of 315,000 in July. The unemployment rate is expected to hold steady at 3.7%.