The number of Americans filing new claims for unemployment benefits increased moderately last week, indicating the labor market remains tight despite the Federal Reserve’s attempt to cool demand with aggressive interest rate increases.
The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy’s health, suggested that job growth remained solid this month. Applications for unemployment benefits had declined for the past five weeks.
The central bank delivered a 75-basis-point rate hike on Wednesday, its third straight increase of that magnitude. It signaled more large increases to come this year.
“Fed officials are hitting the brakes hard, but so far employers are just giving this policy a great, big yawn and holding on tight to their workers,” said Christopher Rupkey, chief economist at FWDBONDS. “It’s either that or there is some sort of stealth job losses where those made redundant are not getting unemployment benefits.”
Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 213,000 for the week ended Sept. 17, the Labor Department said on Thursday. Data for the prior week was revised to show 5,000 fewer applications filed than previously reported. Economists polled by Reuters had forecast 218,000 applications for the latest week.
Fed Chair Jerome Powell told reporters on Wednesday that “there’s only modest evidence that the labor market is cooling off,” describing it as continuing “to be out of balance.”
Since March, the Fed has raised its policy rate by three percentage points to the current range of 3.00% to 3.25%.
The four-week average for claims, which evens out some of the weekly volatility, fell by 6,000 to 216,750. There was a surge in applications in Michigan and notable increases in California, Georgia, Massachusetts and New York. Only Indiana reported a significant decrease in filings.
Economists say companies are hoarding workers after experiencing difficulties hiring in the past year as the COVID-19 pandemic forced some people out of the workforce, in part because of prolonged illness caused by the virus.
There were 11.2 million job openings at the end of July, with two jobs for every unemployed person.