New applications for unemployment benefits rose for the third week in a row, amid separate signs that the U.S. labor market remains unusually tight.
Initial jobless claims, a proxy for layoffs, increased by 21,000 to a seasonally adjusted 218,000 last week from the previous week’s revised level of 197,000, the Labor Department said Thursday. Despite the recent rise, claims remain historically low with last week’s figure matching the 2019 average ahead of the Covid-19 pandemic.
The four-week average for claims, which smooths out volatility in the weekly figures, rose to 199,500 from the previous week’s revised 191,250, the Labor Department said Thursday. The four-week average reached 170,500 last month, its lowest point on records dating back to 1967.
Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, declined to 1.3 million for the week ended May 7 from the previous week’s level—the lowest level since December 1969. Continuing claims are reported with a one-week lag.
“The labor market is extraordinarily tight right now, it has been for some time. I’m not expecting any meaningful shift in the near term,” said Michelle Green, an economist at Prevedere, an analytics company.
Other indicators point to a labor market that remains on strong footing. U.S. employers added 428,000 jobs in April, which marked the 12th straight month that job gains were above 400,000. The unemployment rate remained at 3.6% that month, nearly matching the half-century low of 3.5% reached just before the pandemic took hold in the U.S., in early 2020.
There were 11.5 million job openings in March, or nearly two openings for every unemployed person seeking work, while the number of times workers quit their jobs reached 4.5 million for the month—both record highs. Federal Reserve Chairman
Jerome Powell
said in a recent interview with The Wall Street Journal that the ratio of job openings to unemployed people seeking work is “extraordinary.”
Wage growth decelerated slightly last month, but remained strong. Workers’ average hourly earnings were 5.5% higher in April compared with the year before, but trailed the 8.3% rise in consumer prices that month.
The Federal Reserve approved a half-percentage-point interest rate hike earlier this month—the largest since 2000—and indicated further rate increases are likely.
The rate increases are intended to curb inflation by cooling demand, which could, in turn, slow the labor market somewhat in the coming months.
Ms. Green said she doesn’t expect layoffs to accelerate in the face of tighter monetary policy, and added that it would be more likely for the level of job openings to decrease first.
Write to Bryan Mena at [email protected]
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