The latest report from the Labor Department shows that the number of Americans applying for jobless claims increased last week, with unemployment benefit applications rising by 8,000 to 229,000 for the week ending June 1. Despite this uptick, layoffs in the U.S. job market remain at healthy levels, as indicated by the four-week average of claims falling to 222,250.
Since the onset of the COVID-19 pandemic in 2020, weekly unemployment claims have consistently stayed at historically low levels, reflecting the resilience of the labor market. The Federal Reserve's efforts to combat high inflation through multiple rate hikes have not led to a recession, thanks to strong consumer demand and a robust labor market.
In April, U.S. employers added 175,000 jobs, the lowest in six months, signaling a potential slowdown in hiring. The unemployment rate inched up to 3.9%, ending a streak of remaining below 4% for 27 consecutive months. Analysts are predicting an addition of 180,000 jobs in the May jobs report.
Job openings fell to 8.1 million in April, the lowest since 2021, indicating a potential shift in the labor market. The moderation in hiring pace and wage growth could prompt the Fed to consider cutting its benchmark interest rate, especially with a milder reading on consumer inflation in April.
While layoffs overall remain low, several prominent companies, particularly in the technology and media sectors, have announced job cuts. Companies like Alphabet, Apple, eBay, Walmart, Peloton, Stellantis, Nike, and Tesla have all recently made announcements regarding layoffs.
As of the week ending May 25, a total of 1.79 million Americans were collecting jobless benefits, reflecting a slight increase of 2,000 individuals. The upcoming decisions by the Federal Reserve and the release of the May jobs report will provide further insights into the state of the U.S. labor market.
