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Jobless claims for the week ended November 19 rose by 240,000, a massive increase in jobless claims from the week before.
There was a sharp increase of 17,000 on Wednesday from last week’s revised figure of 222,000, according to the Labor Department.
The numbers
The jobless claims report exceeded economists’ expectations of 225,000.
Meanwhile, current claims hit an eight-month high of 1.55 million in the week ended November 12.
Claims also include people who have applied for unemployment benefits for more than two consecutive weeks.
Due to a tight labor market, unemployment insurance claims remained historically low.
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Layoffs
Jobless claims continued to rise even as workers returned after lockdowns ended during the pandemic.
However, things can be subject to change.
Large companies have carried out massive layoffs, especially in the technology industry.
However, the layoffs are not necessarily reflected in last week’s jobless claims.
Eugenio Alemán, the chief economist at Raymond James, says many tech workers are secure with their severance package.
Additionally, Alemán is looking for signs of a broad increase in claims from other industries that are not typically covered by severance packages.
“And that’s still not happening today,” he said.
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Claims
Economists at Oxford Economics wrote on Wednesday that weekly jobless claims are volatile and subject to revisions, especially over the holiday season.
“Therefore, we don’t read too much into the larger-than-anticipated drop in claims,” the economists wrote.
Initial weekly claims have averaged fewer than 215,000 this year.
While the 240,000 claims represent a fresh increase, they are still below the 250,000 weekly claims, consistent with the recession, according to Mark Zandi.
Zandi is the chief economist at Moody’s Analytics.
He also said jobless claims were below 300,000, in line with the recession.
“I view the increase in layoffs from the prism of ‘good news is bad news,'” wrote Zandi.
“That is, layoffs are awful for those losing their jobs, but it does mean the job market is cooling off, which is critical to getting inflation back and forestalling more aggressive interest rate hikes by the Federal Reserve.”
Mark Zandi admits he expects more layoffs as big companies in other sectors will start cutting wages in the new year.
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