Unemployment Claims Rise to Eight-Month High as Labor Market Cools
July 21, 2022
Initial claims for unemployment benefits climbed to the highest level since mid-November last week in another sign that the historically tight labor market may be beginning to slow.
Claims totaled 251,000 for the week ending July 16, an increase of 7,000 from the previous week and higher than the 240,000 that economists surveyed by Bloomberg had been anticipating.
The increase means that filings for unemployment insurance are at their highest weekly level since Nov. 2021 and provides another indicator that the labor market, which has been extremely tight in the post-pandemic era, is starting to cool, adding to fears of a recession on the horizon.
Ongoing claims for unemployment benefits, which run a week behind the headline number, increased by 51,000 to 1.38 million, the biggest increase in eight months.
Unemployment claims are climbing as more companies announce job cuts and hiring reductions amid increasing fears of a recession. Economists expect the trend to continue as the Federal Reserve continues its fight against surging inflation with some of the largest interest-rate hikes in decades, which could ultimately curb demand for workers.
A separate economic report also showed some weakness in the labor market. The Philadelphia Fed’s manufacturing index plummeted to -12.3, a 9-point drop from a month earlier and considerably lower than the reading of 1.6 that Dow Jones had estimated. The employment portion of the index fell to 19.4, also a 9-point decline. Though that level does indicate a continued expansion in hiring, it is the lowest reading since May 2021 and also is indicative that hiring intentions are slowing.