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U.S. Unemployment Claims Hit Eight-Month High

U.S. Unemployment Claims Hit Eight-Month High

May 10, 2024

U.S. Unemployment Claims Hit Eight-Month High

In a recent update from the Bureau of Labor Statistics, the number of Americans applying for first-time unemployment benefits has surged to the highest level since August 2023. The report, released on May 9, indicated that for the week ending May 4, initial jobless claims rose by 22,000 to a total of 231,000, which is a significant increase from the 209,000 claims filed the week before.

The data revealed that this is the largest number of applications recorded in eight months, with the previous peak occurring during the week ending August 26, 2023, when filings hit 234,000. In an attempt to minimize the impact of weekly fluctuations, the four-week moving average was also analyzed, showing an uptick of 4,750 reaching 215,000—the highest since February.

When seasonal adjustments are excluded, the unadjusted claims stood at 209,324, marking a rise of 10.4 percent from the preceding week. The Labor Department attributed the rise primarily to a significant increase in filings from New York state, with over 10,000 claims accounting for more than half of the national increase.

Notably, both New York and California have seen a rise in jobless claims, with California experiencing approximately 4,200 new filings following the implementation of the state’s $20 minimum wage law for fast-food workers. Indiana and Illinois also reported increases of over 2,000 claims each, while Iowa and Texas documented a rise in new applications.

During the week that concluded on April 27, the total number of Americans receiving unemployment benefits rose by 17,000 to 1.79 million, as per the Bureau of Labor.

This surge in unemployment applications follows the release of the April jobs report, which showed the addition of 175,000 jobs—falling short of the 243,000 jobs anticipated by analysts and representing a decrease from the 315,000 positions reported in March. This has fueled speculation regarding the Federal Reserve's next steps, with many expecting an interest rate cut as early as September.

The report also indicated a slight uptick in the unemployment rate to 3.9 percent, though it marked the 27th consecutive month of sub-4 percent unemployment rates.

While the Bureau of Labor Statistics did not specify which sectors were most affected, recent announcements of workforce reductions have predominantly come from tech and media companies, such as Amazon, Apple, eBay, Sony, and Snapchat. Other sectors, including fitness and automotive, have also been impacted, with companies like Peloton, Stellantis, and Nike announcing job cuts. Tesla, led by Elon Musk, reported significant layoffs in both California and Texas following a revenue decline.

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