Unemployment claims rise more than forecasted in US

Unemployment claims rise: In a report released by the Labour Department on Thursday, it was revealed that the number of Americans filing new claims for unemployment benefits saw a notable increase last week, surpassing economists' expectations. Initial claims for state unemployment benefits rose by 22,000 to reach a seasonally adjusted 231,000 for the week ending May 4.

Economists, who had anticipated 215,000 claims, were taken aback by the higher figures. This surge marked a deviation from the previous range of 194,000 to 225,000 claims that had persisted for much of the year. Factors contributing to this uptick likely included seasonal fluctuations, with the conclusion of school spring breaks playing a role.

The labour market, which has been undergoing a steady transformation, has been influenced by a series of interest rate hikes by the Federal Reserve since March 2022, amounting to 525 basis points. These measures aimed to temper demand within the broader economy. However, recent indicators suggest a moderation in labour market momentum. April witnessed the addition of the fewest jobs in six months, coupled with a three-year low in job openings reported for March.

Consequently, speculation about potential rate cuts by the Federal Reserve has resurfaced, with financial markets anticipating the initiation of an easing cycle possibly commencing in September. Despite this, the Fed opted to maintain its benchmark overnight interest rate at the current 5.25 per cent to 5.50 per cent range, unchanged since July, according to the latest data.

Moreover, the report highlighted a rise in the number of individuals receiving benefits following an initial week of aid, serving as a proxy for hiring. This figure climbed by 17,000 to a seasonally adjusted 1.785 million during the week ending April 27, as outlined in the claims report.

(with Reuters inputs)