US sees surge of jobless claims
The number of Americans applying for unemployment benefits jumped for the third week in a row, soaring to the highest level in eight months, Reuters reported on Thursday, citing the Labor Department.
Initial claims for state unemployment benefits grew by 7,000 to a seasonally adjusted 251,000 in the week up to July 16, the report says. This tops analysts’ expectations, as economists polled by Reuters had predicted 240,000 applications for the week.
Jobless claims are on the rise as more US companies introduce job cuts amid fears of a recession. According to Bloomberg, tech majors like Google, Apple, Meta, Microsoft, and others recently announced they will be laying off staff and slowing hiring amid global economic uncertainty.
The situation is worsened by the Federal Reserve’s interest rate hikes, aimed to battle inflation but also likely to lower the demand for workers. The Fed has already raised the rate by 150 basis points since March, and is expected to hike it by another 75 basis points at the end of July.
Despite the surge, however, US jobless claims remain below the level experts see as threatening for the economy. Hiring is still strong, data shows, with 372,000 jobs created in June, and 11.3 million jobs open as of the end of May – roughly two openings for every unemployed American.
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