(Washington) Weekly jobless claims in the United States climbed in early June to the highest since October 2021, a sign that layoffs have multiplied, as the United States Federal Reserve (Fed) wants to slow economic activity to bring down inflation.
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. That’s also well above the 237,000 new registrants that analysts were expecting, according to Briefing.com’s consensus.
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 level historically low.
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 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 policy 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 banks to raise the cost of the loans they offer to households and businesses, in order to ease the pressure on prices.
The Fed’s next 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 and avoid recession.
