Initial Jobless Claims Dipped Lower But Employers See Signs Of Job Market Cooling

Job seekers look over job opening fliers at a WorkSource exhibit. (David McNew/Getty Images)

Fewer Americans applied for unemployment benefits last week, reflecting a tight job market, despite recent layoffs in certain sectors of the economy that have witnessed a downturn, according to the Labor Department on June 30.

Those filing for jobless claims fell to 231,000 last week, with a decline of 2,000 from 233,000 in the previous week, the highest four-week average since January 2022.

The four-week average for claims, rose by 7,250 from the previous week to 231,750, while the previous week’s average was revised up by 1,000 from 223,500 to 224,500.

First-time claims generally represent the number of layoffs for the week.

There were 1,328,000 continuing jobless claims, which are the best early recession indicator. This fell below the upwardly revised 1,331,000 figure from last week, which has hovered at near 50-year lows for several months.

The seasonally adjusted insured unemployment rate was 0.9 percent for the week ending June 18, a decrease of 0.1 percentage point from the previous week’s revised rate.

Initial claims rose to 207,421 last week, on an unadjusted basis, reflecting a surge in layoffs in states like New Jersey and Massachusetts.

Previous government reports showed that American employers added 390,000 jobs in May, amid a strong hiring environment in an economy under pressure from rising prices.

Although growth in hiring for May was strong, the month witnessed the lowest monthly gain in a year along with increasing signs that more layoffs could be coming, in sectors most sensitive to rising interest rates and inflation.

Labor Shortages

Labor shortages have become an issue since the start of the pandemic in 2020, with many workers quitting or finding new jobs.

Many others have dropped out of the workplace altogether and have fallen off the rolls, while not seeking new any position, in what is known as the “Great Resignation.”

However, since May, some of the gains in jobs and wages, have been recently reduced by extreme levels of inflation not seen since the early 1980s.

The Labor Department at the beginning of June reported that consumer prices had risen 8.6 percent in May from a year earlier.

The Federal Reserve raised interest rates by 75 basis points in response to curtail rising prices on top of the 50-point increase from early May.

Laying Off Staff

Companies like Netflix, Tesla, Compass, Redfin, Wells Fargo, and JP Morgan Chase, have announced or laid off hundreds of employees amid concerns about the future economic outlook in the past week.

These cuts, while still relatively low, have been the highest since early 2022.

Coinbase, the crypto trading platform, has laid off 1,100 employees this month, or about 18 percent of its global workforce, after cryptocurrency has taken a nosedive in recent months, as part of a restructuring plan.

Meanwhile, the electric vehicle giant, Tesla, announced that it would slash about 10 percent of its salaried workforce, approximately 3.5 percent of its total employees.

Tesla’s CEO, Elon Musk, said that the automaker’s factories in Austin and Berlin were losing billions of dollars in expenses as “money furnaces,”  due to a slowdown in the supply chain, which has limited the rate of vehicle production.

Netflix terminated 150 employees in May and another 300 in June after it reported losing subscribers for the first time in more than a decade.

Redfin, the real estate brokerage, fired 8 percent of its workforce under pressure from a cratering housing market caused by higher interest rates, while its rival Compass, is dropping 450 of its employees.

Reuters and the Associated Press contributed to this report.