New Weekly Jobless Claims in the United States Climb to Highest Level Since October 2021 Amidst Inflation Concerns

Weekly jobless claims in the United States climbed in early June to the highest since October 2021, a sign that layoffs have multiplied, while the American central bank (Fed) wants to slow economic activity to bring inflation down .

Between May 28 and June 3, 261,000 people registered to receive unemployment benefits, according to data released Thursday by the Labor Department.

This is 28,000 more than the previous week. It is also much more than the 237,000 new registrants that were expected by analysts, according to the consensus of Briefing.com.

And there could be “a larger increase in layoffs in the coming weeks and months as a result of tighter monetary policy” from the Fed, warns Rubeela Farooqi, chief economist for HFE.

The labor market remained solid in May, with 339,000 job creations, with however an unemployment rate up 0.3 points, to 3.7%, the highest since October 2021 but still at a historically low level. .

The movement in opposite directions of job creations and the unemployment rate is explained by the different origins of these data, one from a survey of businesses, the other from households.

It also comes from the self-employed, whose ranks had swelled after mass layoffs in the spring of 2020, when the pandemic hit the economy hard. Faced with the economic slowdown, many are now turning to wage employment, without finding employment immediately.

To curb inflation, the Fed has raised its key rates ten times since March 2022, by a total of 5 percentage points. These are now within a range of 5.00 to 5.25%.

This leads the banks to raise the cost of the loans they offer to households and businesses, in order to ease the pressure on prices.

The next Fed meeting is June 13-14, and Fed officials may choose not to raise rates, for the first time since March 2022, to take time to observe the effects of the hikes. precedents of and avoid recession.