The weekly jobless claims in the US rise beyond anticipated levels

Last week, the number of Americans filing new claims for unemployment benefits surged beyond projections, indicating a gradual easing in the labor market.

The Labor Department reported on Thursday that initial claims for state unemployment benefits rose by 22,000 to reach a seasonally adjusted 231,000 for the week ending May 4. Economists surveyed by Reuters had predicted 215,000 claims for the same period. Throughout much of the year, claims had been consistently within the range of 194,000 to 225,000.

A portion of the increase observed last week can be attributed to seasonal factors, possibly due to the conclusion of school spring breaks.

Following a series of interest rate hikes totaling 525 basis points by the Federal Reserve since March 2022 to moderate demand across the economy, the labor market is gradually adjusting. According to government reports from last week, April saw the smallest increase in jobs in six months, alongside a decrease in job openings to a three-year low in March.

The diminishing momentum in the labor market has reignited discussions about the possibility of two interest rate cuts by the Fed this year. Financial markets anticipate that the US central bank will commence its easing cycle in September.

Last week, the Fed maintained its benchmark overnight interest rate within the existing range of 5.25% to 5.50%, where it has remained since July.

According to the claims report, the tally of individuals receiving benefits after the initial week of assistance, serving as an indicator of hiring, rose by 17,000 to reach a seasonally adjusted 1.785 million for the week ending April 27th.