US Jobless Claims Edge Up, but Labor Market Stays Resilient
New applications for unemployment benefits in the United States rose last week, according to data released by the Labor Department, though layoffs remain near historic lows in a sign of continued labor market strength. Initial jobless claims climbed to 229,000 for the week ending June 22, an increase of 4,000 from the previous week’s revised level of 225,000.
Despite the uptick, the four-week moving average—a less volatile measure—declined slightly to 231,750, suggesting the labor market remains stable. Claims have stayed below 250,000 for most of 2024, a threshold economists view as indicative of a healthy job market. By comparison, weekly claims averaged around 220,000 in 2019 before the pandemic.
Layoffs Stay Below Pre-Pandemic Norms
Employers have been reluctant to reduce headcounts despite economic uncertainty, as demand for workers continues to outpace supply in many industries. The unemployment rate has hovered between 3.7% and 3.9% this year, near a 50-year low. Persistent labor shortages in sectors like healthcare, hospitality, and manufacturing have incentivized businesses to retain staff, even as higher borrowing costs and inflation pressure profit margins.
- Job Openings: There were 8.1 million job openings in May, down from peaks in 2022 but still above pre-pandemic levels.
- Quit Rate: The rate of workers voluntarily leaving jobs held steady at 2.2%, signaling confidence in finding new roles.
- Challenger Report: Announced layoffs in 2024 are down 20% year-over-year, per outplacement firm Challenger, Gray & Christmas.
Economic Crosscurrents
While the job market remains a pillar of economic stability, policymakers and analysts are monitoring mixed signals. The Federal Reserve’s aggressive interest rate hikes since 2022 have slowed inflation but not triggered widespread job losses—a rare “soft landing” scenario. However, sectors like technology and finance have seen sporadic layoffs, with companies citing cost-cutting and shifting priorities.
“The labor market is cooling, but it’s not collapsing,” said Diane Swonk, chief economist at KPMG. “Employers are holding onto workers because they know how hard it was to rehire after the pandemic.”
Potential Risks Ahead
Economists caution that risks persist, including geopolitical tensions, sticky inflation, and high interest rates. Consumer spending—a key driver of growth—has begun to moderate, with retail sales growth slowing in May. A prolonged downturn in hiring or a sudden surge in layoffs could signal broader economic weakness.
For now, however, the low level of jobless claims suggests the labor market’s resilience remains intact. The Labor Department’s June jobs report, due next week, is expected to show employers added around 190,000 jobs, with unemployment holding at 4.0%.
