Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.
First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.
Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.
That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.
The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.
US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.
Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.
Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.
“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.
The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.
While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”
Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”
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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia
Other Economy News Today
US schools are now bracing for painful layoffs across the United States as pandemic aid packages come to an end.
Schools across the country are announcing teacher and staff layoffs as districts brace for the end of a pandemic aid package that delivered the largest one-time federal investment in K-12 education, reports CNN.
The funds must be used by the end of September, creating a sharp funding cliff as schools also struggle with widespread enrollment declines and inflation.
Many districts have warned of layoffs as the current school year comes to a close and next year’s budgets are planned.
In Missoula, Montana, for example, the public school district is considering cutting 33 teaching positions and 13 administrative positions, including its special education director and fine arts director, as it faces a budget shortfall.
“The last time that MCPS (Missoula County Public Schools) saw these types of reductions was almost a generation ago,” superintendent Micah Hill said at a school board meeting earlier this year.
Not only is the federal funding ending, but enrollment at the district’s schools has fallen by nearly 500 students – or roughly 5% – since 2019.
At the same time, the district is facing rising insurance and utility costs, Hill said in a statement sent to CNN.
In Arlington, Texas, the public school district will cut 275 positions at the end of this school year that were funded by the federal pandemic aid funds.
They include staff that helped provide after-school care, tutoring and mental health services.
The district, which employs about 8,500 staff in total, has said that employees affected by the layoffs can apply to other available positions.
And in Hartford, Connecticut, 30 teachers and 79 other staff members have been notified that they have lost their jobs. In total, about 384 positions will be cut, though some of them were already vacant and others won’t be filled after a staff member retires or leaves.
Enrollment at Hartford Public Schools is down 21% since 2010 due to a decline in the school-age population and a policy that allows Hartford residents to enroll at schools in neighboring districts.
“That is a long-term problem that has been exacerbated by the ESSER cliff,” superintendent Leslie Torres-Rodriguez said in a statement sent to CNN.
ESSER, or Elementary and Secondary School Emergency Relief, refers to the grant program that provided the federal pandemic-related relief funds.
How many teacher layoffs will occur this year?
If staffing levels were to fall back to the same levels they were before the pandemic in 2018-19, districts would need to lay off 384,000 full-time staff, according to Chad Aldeman, an education analyst.
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Also Read: An Unexpected Retailer Is Now Closing All Stores in Illinois
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