U.S. Jobless Benefits Filings Spike to Highest Point in 10 Months
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U.S. Jobless Benefits Filings Spike to Highest Point in 10 Months

In the face of high interest rates, the number of Americans applying for unemployment benefits unexpectedly surged to a record high last week, marking the latest indication that the labor market is beginning to weaken.

According to Labor Department data made public on Thursday, initial claims for the week ending June 8 rose by 13,000 to 242,000, surpassing the pre-pandemic average of 218,000 claims in 2019.

Since August 2023, this represents the highest level of unemployment claims.

For the week ending June 1, the number of continuing claims—filed by Americans who are continuously receiving unemployment benefits—rose to 1.82 million, an increase of 30,000 from the week before.

Bill Adams, chief economist for Comerica Bank stated that, “Initial jobless claims spiked in the first half of June, suggesting the unemployment rate’s move higher might hold in the next release. But jobless claims are volatile month to month, so it’s very early to call this a sign of broader labor market weakness.”

The Federal Reserve, which boosted interest rates to the maximum level in 2022 and 2023 in an effort to calm the economy and the labor market, may face significant repercussions from the weaker-than-expected figures.

Authorities have indicated that they will continue to maintain high interest rates until they are certain that excessive inflation has been controlled.

According to experts, the central bank may continue to lower rates in September despite the most recent jobless numbers.

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“The latest data in hand nudge the door a little wider open for the Fed to begin making an interest rate cut later this year,” Adams stated.

Over the past year, the job market has remained unusually tight, confounding projections of a decline from experts. It is not breaking, but it is starting to normalize following last year’s explosive speed, according to economists.

At the beginning of the month, the Labor Department said that although the economy added 272,000 jobs in May, the unemployment rate unexpectedly increased to 4%.

Reference

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With more than two years of expertise in news and analysis, Eileen Stewart is a seasoned reporter. Eileen is a respected voice in this field, well-known for her sharp reporting and insightful analysis. Her writing covers a wide range of subjects, from politics to culture and more.