Layoffs rise amid signs Fed strategy cools hiring

The number of Americans filing for unemployment benefits rose slightly last week but remains at healthy levels that continue to show a strong U.S. labor market.

U.S. applications for jobless claims were 232,000 for the week ending May 27, up just 2,000 from the previous week. The weekly claims numbers are considered representative of the number of U.S. layoffs.

The four-week moving average of claims, which flattens out some of the week-to-week volatility, fell by 2,500 to 229,500.

Since the pandemic purge of more than 20 million jobs three years ago, the U.S. economy has added jobs at a furious rate and Americans have enjoyed unusual job security. That’s despite interest rates rising for over a year and fears of a looming recession.

In early May, the Fed raised its benchmark lending rate for the 10th time in a row in its bid to cool the economy and bring down four-decade high inflation. Part of the Fed’s goal is to cool the labor market, which still favors workers, though some signs of weakness were seen in recent months.

In April, U.S. employers added a healthy 253,000 jobs, and the unemployment rate dipped to 3.4%, matching a 54-year low. But the figures for February and March were revised lower by 149,000 jobs, potentially signaling that the Fed’s rate strategy is starting to cool the job market.

The May jobs report comes out Friday. The government reported Wednesday that U.S. job openings rose in April, with employers posting 10.1 million job openings, up unexpectedly from 9.7 million in March and the most since January. Wednesday’s job openings report — along with layoffs data and Friday’s jobs report — could help sway the Fed on its June 14 decision on rates.