By Jeffry Bartash
The numbers: The number of people who applied for unemployment benefits last week jumped by 29,000 to a five-week high of 219,000, possibly a sign of rising layoffs as the U.S. economy slows and businesses scale back employment.
Economists polled by the Wall Street Journal had forecast new claims to total 203,000 in the seven days ended Oct. 1. The figures are seasonally adjusted.
The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse.
One caveat: Raw or actual unemployment filings are still near a historic low. The government’s process for seasonal adjustments has exaggerated the increase in new claims repeatedly since the spring.
Part of the central bank’s goal is to cool off a red-hot labor market in which wages are rising sharply and adding to inflation.
The Fed’s strategy might already be taking effect. Though still quite low, layoffs rose by one measure to an 18-month high . And some large companies such as GE /zigman2/quotes/208495069/composite GE -3.03% , Facebook /zigman2/quotes/205064656/composite META -2.36% and The Gap have either announced layoffs or reportedly plan to do so.
The Fed predicts the jobless rate will climb to 4.4% by the end of 2023 from the current level of 3.7%. The government will release the latest unemployment rate in Friday’s September employment report.
Key details: Of the 53 states and U.S. territories that report jobless claims, 30 showed an increase and 23 recorded a decline.
Most of the new claims were concentrated in a handful of places such as Puerto Rico, Missouri and Massachusetts . The jump in claims in Puerto Rico came after another hurricane devastated the island.
The number of people already collecting unemployment benefits, meanwhile, rose by 15,000 to 1.36 million. They remain near a 50-year low, however.
Economists caution about reading too much in the claims report. The government’s adjusted data has been more erratic since the pandemic.
New jobless claims before seasonal adjustments, for instance, were much lower last week at 167,083 compared to the headline number that gets Wall Street’s attention . That’s one of the lowest readings in history.
Looking ahead: “Overall, layoffs remain low,” said chief economist Rubeela Farooqi of High Frequency Economics said, but “we expect layoffs to rise gradually over coming months in response to Fed tightening.”