Initial Jobless Claims At Highest Level Since August

Initial jobless claims hit their highest level since August, the Department of Labor reported Thursday, another sign that the historically strong labor market is beginning to cool.

Claims rose to 228,000 in the week ending Oct. 8, up 9,000 from the week before and pushing the four-week moving average up to 211,500, the Department of Labor reported. The U.S. added 263,000 jobs in September, its weakest showing since April 2021 and just half of the additions seen in June, all but guaranteeing that the Federal Reserve will continue to raise interest rates at its aggressive pace of 0.75% up to 4% in November, according to CNBC. (RELATED: The Unemployment Rate Dropped In September — But The Reason Why Is Far From Encouraging)

Unemployment dipped to 3.5% in September, a 50-year low, but a declining labor force has helped push unemployment numbers down. The Federal Reserve expects that its aggressive campaign of interest rate hikes will likely continue through the new year, putting further pressure on the labor market and contributing to a projected median unemployment rate of 4.4% in 2023.

Jobless claims rose the week of Oct. 1, primarily off the back of a rash of new applicants from Puerto Rico following Hurricane Fiona, according to Reuters. Similarly, after Hurricane Ian made landfall Sept. 28, Florida led the way with an increase of roughly 10,000 new applicants in the week ending Oct. 8, according to the Department of Labor.

Potentially overlooked given this morning’s #CPI release, but both initial and continuing jobless claims inched up. Both are still below recent peaks. pic.twitter.com/7hflPX8j4J

— Kathy Jones (@KathyJones) October 13, 2022

While initial claims are climbing, the Oct. 8 initial claims are down approximately 90,000 from the same time last year, while the four-week moving average is down by around 140,000 claims from the same time, the Department of Labor reported.

Michael Gapen, Bank of America’s Chief U.S. Economist, said in a CNN appearance Monday that unemployment might jump as high as 5.5%.

“We could see six months of weakness in the labor market,” said Gapen.

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