April 23, 2024
The number of Americans seeking unemployment aid was higher over the past few months than the government had initially reported, reflecting a modest rise in layoffs as the economy has slowed in the face of higher interest rates.
The Labor Department reported Thursday that the number of applications has exceeded 200,000 since early February — above previous estimates, though still relatively low by historical standards.
The department has revised its estimates of the number of weekly applications for jobless benefits under a new formula it is using to reflect seasonal adjustments. The new formula is intended to more accurately capture seasonal patterns in job losses.
For the week that ended April 1, the number of Americans applying for jobless aid was 228,000, the government estimated. That was down from 246,000 in the previous week and 247,000 in the week before that. Using its new seasonal adjustment formula, the government revised up each of those figures by nearly 50,000.
“The trend in seasonally adjusted initial claims is noticeably higher than previously estimated, which does suggest that the flurry of layoff announcements so far this year has begun to show up in these data,” Stephen Stanley, chief U.S. economist of Santander U.S. Capital Markets, wrote in a research note.
First-time applications for unemployment benefits serve as a proxy for the number of job cuts because most people who are laid off file for jobless aid. About 1.82 million people were receiving jobless aid in the week that ended March 25, an increase of 6,000 from the week before.
The job market appears to be finally showing some signs of softening, more than a year after the Federal Reserve began an aggressive campaign to cool inflation by steadily raising its benchmark borrowing rate.
On Tuesday, the Labor Department reported that U.S. job openings slipped to 9.9 million in February, the fewest since May 2021. And on Wednesday, the payroll firm ADP reported that the nation’s private employers added 145,000 jobs in March, down sharply from 261,000 in February. Pay raises also weakened for workers, according to the ADP Research Institute.
ADP's figures often diverge, from month to month, from the government's more comprehensive jobs report, which provides a more granular review of the labor market, though the two tend to converge over time. On Friday, when the government issues the March jobs report, analysts expect it to show that employers added a solid 240,000 jobs last month.
In February, the government reported, employers added a robust 311,000 jobs, fewer than January’s huge gain but enough to keep pressure on the Fed to keep raising rates to fight inflation. The unemployment rate rose to 3.6%, from a 53-year low of 3.4%.
In its latest quarterly projections, the Fed predicts that the unemployment rate will rise to 4.5% by year’s end, a sizable increase historically associated with recessions.
Layoffs have been mounting in the technology sector, where many companies hired aggressively during the pandemic. IBM, Microsoft, Salesforce, Twitter and DoorDash have all announced layoffs in recent months. Amazon and Facebook have each announced two sets of job cuts since November.
