The number of Americans filing new claims for unemployment benefits rose more than expected last week, indicating that labor market conditions are continuing to improve, which could help the Federal Reserve's efforts to tackle inflation.
Claims for jobless benefits rose by 13,000 to an adjusted 231,000 for the week ended Nov. 11, according to Labor Department data on Thursday. Reuters economists had forecast 220,000 claims for the latest week.
The labor market is slowing with higher interest rates dampening demand. Job growth slowed in October and the unemployment rate rose to 3.9%, the highest level since January 2022. With 1.5 jobs available for every unemployed person in September, things are still pretty tight.
Economists at Goldman Sachs said they do not believe that last month's increase in the unemployment rate is a bad sign, noting that the increase in the unemployment rate since April has come entirely from an increase in the size of the labor market rather than a decline in employment.
Recovering labor market conditions, along with lower inflation and consumer spending, have raised expectations that the Fed's cycle of monetary tightening has come to an end. Financial markets are even expecting an interest rate cut in May next year, according to CME Group's FedWatch tool. Since March 2022, the Fed has increased its policy rate by 525 basis points to the current range of 5.25%-5.50%.
The number of people receiving benefits after the initial aid week, an indicator of employment, rose by 32,000 to 1.865 million during the week ending Nov. 4, according to the claims report. These ongoing claims have increased since September.
The US dollar is currently trading lower with a decrease of 0.20% to a trading level of 104.07.
