A sign seeking job applicants is displayed at a restaurant in Wheeling, Ill., Thursday, May 16, 2024. On Thursday, May 23, 2024, the Labor Department reports on the number of people who applied for unemployment benefits last week.(AP Photo/Nam Y. Huh)
The number of Americans applying for unemployment benefits fell last week as layoffs remained historically low despite the Federal Reserve’s efforts to loosen the labor market.
Jobless claims for the week ending May 18 fell by 8,000 to 215,000, down from 223,000 the week before, the Labor Department reported Thursday.
The four-week average of claims, which softens some of the week-to-week volatility, rose a modest 1,750 to 219,750.
Weekly unemployment claims are considered a proxy for the number of U.S. layoffs in a given week and a sign of where the job market is headed. They have remained at historically low levels since millions of jobs were lost when the COVID-19 pandemic hit the U.S. in the spring of 2020.
READ: US applications for jobless benefits come back down
The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 to stifle the four-decade-high inflation that took hold after the economy rebounded from the COVID-19 recession of 2020. The Fed’s intention was to loosen the labor market and cool wage growth, which can fuel inflation.
Many economists thought there was a chance the rapid rate hikes could cause a recession, but jobs remain plentiful and the economy is still broadly healthy thanks to strong consumer spending.
Unemployment rate, job openings
In April, U.S. employers added just 175,000 jobs, the fewest in six months and a sign that the labor market may be finally cooling off. The unemployment rate inched back up to 3.9 percent from 3.8 percent and has now remained below 4 percent for 27 straight months, the longest such streak since the 1960s.
READ: Another month of robust US job growth points to continued economic strength
The government also recently reported 8.5 million job openings in March, the lowest number of vacancies in three years.
Moderation in the pace of hiring, along with a slowdown in wage growth, could give the Fed the data it has been seeking to finally issue a cut to interest rates. A cooler reading on consumer inflation in April could also play into the Fed’s next rate decision.
Though layoffs remain at low levels, companies have been announcing more job cuts recently, mostly across technology and media. Google parent company Alphabet, Apple and eBay have all recently announced layoffs.
Outside of tech and media, Walmart, Peloton, Stellantis, Nike and Tesla have recently announced job cuts.
In total, 1.79 million Americans were collecting jobless benefits during the week that ended May 11. That’s up 8,000 from the previous week and 84,000 more than the same time one year ago.