US jobless claims rise to 242,000, biggest increase in six weeks

US employers announced about 67,000 job cuts last month, bringing the total this year to roughly 340,000 (Representative image)

Applications for US unemployment benefits rose by the most in six weeks while continuing claims fell, flagging some softening in a labor market that remains relatively resilient.

Initial unemployment claims rose by 13,000 to 242,000 in the week ended April 29, Labor Department data showed Thursday. The median forecast in a Bloomberg survey of economists was for 240,000 applications.

Continuing claims, which include people who have received unemployment benefits for a week or more and are a good indicator of how hard it is for people to find work after losing their jobs, fell by 38,000 to 1.81 million in the week ended April 22. That marked the biggest drop since July.

Even as the labor market starts showing some weakness, it’s still cooling at a much slower pace than other economic indicators in the wake of an aggressive tightening campaign by the Federal Reserve.

After raising interest rates by a quarter point on Wednesday, Fed officials are now expected to pause their tightening campaign and let the higher borrowing costs make their way through the economy — which they hope will eventually translate into some cooling in the job market.

On an unadjusted basis, claims fell about 5,500 to 219,619. New York led the drop, with Illinois also registering a sizable decline.

The data can be choppy from week to week. The four-week moving average in initial claims, which smooths out some of the volatility, increased to 239,250.

Companies including Shopify Inc. and Morgan Stanley were among the latest to announce high-profile layoffs this week, adding to a string of firms trying to cut costs in an environment of slowing demand.

US employers announced about 67,000 job cuts last month, bringing the total this year to roughly 340,000, according to data from consulting firm Challenger, Gray & Christmas Inc. out Thursday. That’s about four times more than in the first four months of 2022. At the same time, companies scaled back their hiring plans at the start of the year to the lowest level since 2016.

Separate data out earlier this week also showed a mixed picture regarding the direction the labor market is headed. While vacancies at US employers fell by more than forecast and layoffs jumped in March, another report showed private payrolls rose by the most in nine months in April.

Economists expect the Labor Department’s monthly jobs report to show Friday that employers scaled back hiring and the unemployment rate ticked up slightly from historically-low levels last month.