The number of Americans that have applied to receive unemployment benefits has jumped for the third week in a row. According to the Department of Labor, this latest jump in jobless claims is the highest in eight months.
For the week ending on July 16, initial unemployment claims increased by 7,000 to 251,000. Economists surveyed by Reuters only expected the Labor Department to receive around 240,000 initial unemployment claims for that week. (Related: Jobless claims surge to highest level in 6 months as employers cut jobs due to weakening economy.)
On an unadjusted basis, initial claims increased to 248,991. Massachusetts posted the largest increase in initial claims, rising by more than 14,000. California, South Carolina and Georgia also posted increases in initial claims. Claims in New York fell after posting massive increases in the previous weeks due to layoffs in transportation, warehousing, healthcare and education.
Jobless claims dropped to a near-record low in March to around 166,000. The level of new unemployment claims being filed since then has been steadily rising.
Meanwhile, the number of people that receive benefits following an initial claim rose by 51,000 to 1.384 million during the week ending on July 9. This is the largest increase in people receiving unemployment benefits since Nov. 2021.
Continuing claims are hovering between 1.3 to 1.4 million, which is more than 300,000 claims below the pre-2020 average of about 1.7 million.
According to Thomas Simons and Aneta Markowska, economists for the Jefferies Financial Group, this suggests that many people losing their jobs are getting new ones quickly.
“Several large companies have indicated that they intend to lay off various numbers of workers, but the claims data do not suggest that much of this layoff activity has begun in any meaningful way,” they wrote in a client note. “If it has, then the negative impact is overwhelmed by continued strong demand for labor by other firms.”
Experts have noted that unemployment claims are rising as more companies announce planned job cuts amid increasing fears that a recession is coming. As the Federal Reserve continues hiking up interest rates, the trend may continue and accelerate as the central bank curbs demand for more workers.
The Federal Reserve Bank of Philadelphia noted that its monthly manufacturing index for the mid-Atlantic region slid this month to a reading of minus 12.3. This is the second month in a row that the region’s manufacturing sector has contracted.
The economists surveyed by Reuters indicated that they see a sharp slowdown in activity in the coming months, with their six-month outlook forecasting that manufacturing will contract by negative 18.6 in the mid-Atlantic, which would be its largest reduction in size since Dec. 1979.
Tech companies like Google, Apple, Meta and Microsoft are also slowing down hiring, claiming that global economic uncertainty is preventing them from expanding as quickly as they would like. Firms in other industries like cryptocurrency, housing and automobiles have also said they are either slowing down hiring or letting workers go.
Learn more about the unemployment crisis and the collapse of the American economy at Bubble.news.
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