WASHINGTON, March 9 (AP) — The number of Americans filing for unemployment benefits hit the biggest increase in five months last week, but the number of layoffs remains at record lows as the labor market continues to largely defy the Federal Reserve. influence of interest.
Initial claims for state unemployment benefits rose 21,000 to 211,000 in the week ended March 4, from 190,000 the previous week, the Labor Department said on Thursday. This is the first time in eight weeks that more than 200,000 applications have been filed.
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The four-week moving average of initial jobless claims rose 4,000 to 197,000 last week, staying below the 200,000 threshold for the seventh straight week.
Filing for unemployment benefits is considered a proxy for layoffs.
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Last month, the Fed raised its main lending rate by 25 basis points, its eighth consecutive hike in a year-long battle to combat stubborn inflation. The central bank’s benchmark interest rate is currently between 4.5% and 4.75%, the highest level in 15 years, and some analysts predict three or more rate hikes will bring the lower end of the rate to 5.5%.
The Fed’s interest rate hikes are aimed at cooling the economy, labor market and wages, thereby keeping prices under control. But so far, none of those things have happened, at least not to the extent the central bank had hoped.
Inflation is still more than double the Fed’s 2% target, and the economy is growing and adding jobs at a healthy pace.
Last month, the government reported that employers added a better-than-expected 517,000 jobs in January, and the unemployment rate fell to 3.4%, the lowest level since 1969. Analysts expect Friday’s jobs report to show the U.S. economy added another 208,000 jobs in February.
Fed policymakers forecast that the unemployment rate will rise to 4.6% by the end of the year, a sizeable increase historically associated with recessions.
While the U.S. labor market remains strong, layoffs in the tech industry have been on the rise, with many companies overhiring after the pandemic boom. IBM, Microsoft, Amazon, Salesforce, Facebook parent Meta, Twitter and DoorDash have all announced layoffs in recent months.
The real estate sector has also been hit by the Fed’s rate hikes. Higher mortgage rates — currently above 6 percent — have slowed home sales for 12 straight months. This is almost in line with the Fed’s interest rate hikes that began last March.
About 1.72 million people were receiving unemployment benefits in the week ended Feb. 25, an increase of 69,000 from the previous week. (Associated Press)
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