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Unemployment in the US is rising but still remains low at historical levels

Jobless claims are an indicator of layoffs, and these levels show exceptional job security.

The number of Americans filing for unemployment benefits rose to its highest level since August but still remains low by historical standards.

The Labor Department reported on Wednesday that 240,000 people filed for unemployment benefits last week, up 17,000 from the week before. The four-week moving average of claims, which smoothes week-to-week volatility, rose 5,500 to 226,750.

Jobless claims are an indicator of layoffs, and the current low level shows that American workers enjoy exceptional job security.

But it can’t last.

To combat inflation, which hit a four-decade high earlier this year, the US Federal Reserve has raised interest rates six times since March. The housing market has collapsed under the strain of mortgage rates, which more than doubled from a year earlier. And many economists expect the United States to slip into recession next year as higher borrowing costs slow economic activity.

But the labor market has remained strong. Employers added 261,000 jobs last month and are creating an average of nearly 407,000 a month this year to make 2022 the second-best year for hiring after 2021, in government records dating back to 1940. There are almost two job openings for every unemployed American. The unemployment rate is 3.7 percent, a few ticks above a half-century low.

Weekly jobless claims were extremely low earlier this year – staying below 200k for most of February, March and April. After that, they started to rise and reached 261,000 in mid-July before trending down again.

“We expect layoffs to pick up as demand eases in response to higher interest rates,” Rubeela Farooqi, chief US economist at High Frequency Economics, said in a research note. “However, the move will likely be gradual as companies still face labor shortages and are reluctant to downsize their workforce.”

The Labor Department said Wednesday that 1.55 million people received unemployment benefits in the week ended November 12, up 48,000 from the week before.

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