US unemployment rises but still remain low by historic levels

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Applications for unemployment benefits are a proxy for layoffs and these levels show exceptional job security.

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The number of Americans applying for unemployment benefits rose to the highest level since August but is still low by historical standards.

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The Labor Department reported Wednesday that 240,000 people applied for jobless aid last week, up 17,000 from the week before. The four-week moving average of claims, which smoothes out week-to-week volatility, rose 5,500 to 226,750.

Applications for unemployment benefits are a proxy for layoffs and current low levels show that American workers enjoy exceptional job security.

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But this cannot last.

To combat inflation that hit a four-decade high earlier this year, the Federal Reserve has raised its benchmark interest rate six times since March. The housing market has been under pressure from mortgage rates that have more than doubled from a year ago. And many economists expect the United States to slide into recession next year as higher borrowing costs slow economic activity.

But the job market remains strong. Employers added 261,000 jobs last month and are creating an average of about 407,000 a month this year, on pace to make 2022 the second best year for hiring, after 2021, in government records dating back to 1940. Every unemployed American. The unemployment rate is 3.7 percent, a little over a half-century low.

New weekly applications for unemployment benefits were extremely low earlier this year – staying below 200,000 for most of February, March and April. They then began to rise and trended down again, peaking at 261,000 in mid-July.

“We expect layoffs to increase as demand softens in response to higher interest rates,” Rubella Farooqi, chief US economist at High Frequency Economics, said in a research report. “However, the move is likely to be gradual as businesses are still grappling with labor shortages and will be reluctant to cut their workforce.”

The Labor Department said Wednesday that 1.55 million people were receiving jobless aid in the week ending Nov. 12, up 48,000 from the previous week.

Credit: www.aljazeera.com /

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