The number of Americans filing for unemployment benefits unexpectedly declined last week, suggesting that demand for employees remains strong amid a continuing labor shortage.
Figures released Thursday by the Labor Department show that applications for the week ended Aug. 13 edged lower to 250,000 from the downwardly revised 252,000 recorded a week earlier.
That is above the 2019 pre-pandemic average of 218,000 claims and just narrowly missed topping the eight-month high of 261,000 recorded in mid-July.
New claims in the first week of August were revised down from the preliminary 262,000 reported that would have marked the highest level this year.
Continuing claims, or the number of Americans who are consecutively receiving unemployment aid, rose slightly to 1.437 million for the week ended Aug. 6, up by 7,000 from the previous week’s revised level. That is the highest level since April. By comparison, one year ago, nearly 11.82 million Americans were receiving unemployment benefits.
For months, the labor market has been one of the few bright spots in the economy, with the July jobs report showing that the unemployment rate dropped to 3.5% — a historic low — for the first time since the COVID-19 pandemic began two years ago.
However, despite the relatively steady jobless claims figures, there are signs that the labor market is starting to weaken. A plethora of companies, including Alphabet’s Google, Walmart, Apple, Meta and Microsoft, have announced hiring freezes or layoffs in recent weeks.
There are growing fears that the U.S. economy is on the cusp of a recession as a result of the Federal Reserve’s war on inflation. The central bank is raising interest rates at the fastest pace in decades as it races to cool consumer prices, which climbed 8.5% in June — close to the highest level in 40 years.
Policymakers approved another mega-sized, 75 basis point rate hike — triple the usual size — at their meeting in July and have since signaled they are “nowhere near” ending this tightening cycle, despite signs of a slowdown in the economy.