More Americans on Unemployment as Weekly Jobless Claims Jump to Highest in Months

A hiring sign is displayed in Downers Grove, Ill., on June 24, 2021. (Nam Y. Huh/AP Photo)

More Americans hit unemployment lines last week than markets expected, with a government report showing first-time jobless claims filings rising to their highest level since August, which comes amid broader economic uncertainty.

First-time filings for unemployment insurance jumped to 240,000 for the week ended on Nov. 19, the Department of Labor said in a report (pdf).

Market analysts expected to see 225,000 claims filed, with the sizeable uptick coming as an upside surprise and a possible sign of some labor market softening.

“Jobless claims showing some signs of weakness in latest data,” Liz Young, Head of Investment Strategy at SoFi, said in a statement on Twitter. “Watching closely.”

Continuing claims, which run a week behind the initial filings, rose to 1.55 million, the highest level since March, while analysts expected a lower figure of 1.52 million.

The uptick in unemployment data comes amid a surge in layoffs in the tech sector, with companies from Amazon to Zillow slashing jobs. So far this year, there have been layoffs at more than 830 tech companies, affecting nearly 137,000 workers.

Some economists said the uptick in unemployment data could be technical in nature as the model that the government uses to smooth out seasonal fluctuations typically anticipates a rise in filings due to temporary closures around the holidays.

“Given the disruptions in labor markets, employers may be unwilling to lay people off even on a temporary basis as employers remain focused on employee retention,” said Isfar Munir, an economist at Citigroup in New York. “In general, uncertainty over the next few weeks will be wide as typical seasonal patterns related to the holidays clash with the still abnormally tight labor market.”

Outside the tech and housing sectors, which have both seen a rise in layoffs as the Federal Reserve has pushed interest rates higher to quash inflation and sent borrowing costs soaring, there are signs that businesses are hoarding workers despite signs of economic headwinds.

The unemployment rate is at 3.7 percent, close to a multi-decade low, and there are nearly two job openings for every unemployed American.

A number of economists expect the labor market to soften as the Fed continues to tighten monetary settings in the face of stubbornly high inflation.

“We expect layoffs to rise as demand softens in response to higher interest rates,'‘ Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a research report. “However, the move is likely to be gradual given businesses are still struggling with labor shortages and will be reluctant to cut their workforce.’’

One sign that the jobs market outside of tech and housing may be starting to weaken was reflected in employment data in the most recent Richmond Fed report on manufacturing activity in the U.S. central Atlantic region.

The Richmond Fed report’s employment index fell to a reading of minus 1, dropping below zero for the first time since the pandemic-era wave of layoffs decimated the labor market. Negative readings in the report’s various indexes reflect contraction or recession territory.

While a number of economists expect the U.S. economy to fall into a recession—if it isn’t in one already, as some argue—there are signs that the economy could remain on a path of above-zero growth.

New orders for U.S.-manufactured capital goods rose more than expected in October, suggesting business spending on equipment started the fourth quarter on a solid footing despite demand cooling and borrowing costs rising.