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Jobless claims for the week ending Nov. 19 were up 240,000, a massive increase in jobless claims from the previous week.
There was a sharp increase of 17,000 from last week’s revised figure of 222,000, according to the Labor Department on Wednesday.
The numbers
The latest jobless claims went beyond economists’ expectations of 225,000.
Current claims hit an eight-month high in the week ended Nov. 12 when it reached 1.55 million.
The claims also include people who have applied for unemployment benefits for more than two consecutive weeks.
Unemployment claims lingered around a historic low due to a tight labor market.
Read also: Bank of America predicts high unemployment rate in 2023
Layoffs
Jobless claims continued to increase even as workers returned after lockdowns ended during the pandemic.
However, things can change.
Big companies, especially in the technology sector, have initiated mass layoffs.
However, the layoffs aren’t necessarily reflected in last week’s jobless claims.
Eugenio Alemán, the chief economist at Raymond James, says many tech workers are safe with their severance pay.
Additionally, Alemán is looking for signs of a broad increase in claims from other industries that are not typically covered by severance packages.
“And that’s still not happening today,” he said.
Read also: Federal Reserve hits fifth interest rate hike this year
Claims
Economists from Oxford Economics wrote on Wednesday that weekly jobless claims are volatile and subject to revisions, particularly during the holiday season.
“Therefore, we don’t read too much into the larger-than-anticipated drop in claims,” the economists wrote.
Initial weekly jobless claims have averaged less than 215,000 this year.
Although the 240,000 claims represent a new surge, they are still below the 250,000 weekly requests consistent with a good economy, according to Mark Zandi.
Zandi is the chief economist at Moody’s Analytics.
He also said unemployment claims were below 300,000, in line with the recession.
“I view the increase in layoffs from the prism of ‘good news is bad news,'” wrote Zandi.
“That is, layoffs are awful for those losing their jobs, but it does mean the job market is cooling off, which is critical to getting inflation back and forestalling more aggressive interest rate hikes by the Federal Reserve.”
Mark Zandi admits he expects more layoffs heading into the new year as major companies across other industries begin cutting wages.
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