WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits increased moderately last week, suggesting that the labor market was gradually slowing.
Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 245,000 for the week ended April 15. Economists polled by Reuters had forecast 240,000 claims for the latest week.
The combination of spring breaks, which temporarily left support staff at some school districts unemployed, and people who have exhausted their severance packages following a rush of layoffs in technology and interest rate sensitive sectors, could account for part the rise in claims last week.
While the labor market is slowing, claims at current levels suggest employment growth remains strong, allowing the Federal Reserve to raise interest rates one more time next month, before pausing the U.S. central bank’s fastest monetary policy tightening campaign since the 1980s.
The Fed’s Beige Book on Wednesday described job gains as having “moderated somewhat” in early April “as several districts reported a slower pace of growth” than in recent reports. It also said contacts reported the labor market becoming less tight, noting “a small number of firms reported mass layoffs,” which were “centered at a subset of the largest companies.”
Though the Beige Book reported that several districts noted that banks tightened lending standards, that has not yet been visible in economic data, including claims. Tighter credit conditions generally act with a lag on the economy.
Economists expect the effects to be felt in the months ahead and many are forecasting a recession by the second half of 2023.
The claims data covered the period during which the government surveyed households for the nonfarm payrolls portion of April’s employment report.
Claims were little changed between the March and April survey weeks. The economy created 236,000 jobs in March, more than double what is needed to keep up with growth in the work-age population.
Data next week on people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the state of the labor market in April. The so-called continuing claims increased 61,000 to 1.865 million during the week ending April 8, the claims report showed.
Continuing claims remain low by historical standards as some of the laid off workers are quickly finding employment. There were 1.7 job openings for every unemployed person in February.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
