August 2023 unemployment insurance claims data shows a growing divergence between continuing and initial UI claims, highlighting the contrast expanding in the U.S. labor market. Jobless claims increased a tad, but Americans on unemployment insurance dropped again. For the week ending April 19, initial jobless claims rose by 6,000 to 222,000. Combined with continuing claims, the total number of Americans on unemployment benefits dropped by 37,000. This decrease lowered the total to 1.84 million for the corresponding week of April 12.
Despite that increase in first time jobless claims, the four week moving average of applications dropped by 750 to 220,250. Weekly applications for regular state jobless benefits are an important gauge of layoffs. Although fears of an impending recession loom large, today’s figures indicate that companies continue to retain their employees to a remarkable extent. Since the latter half of 2020, weekly applications have hovered between 200,000 and 250,000. That trend is evidence that the labor market is still fairly tight.
After all, this labor market is booming, both perennially popular accolades notwithstanding. There are 11 million job openings and layoffs have continued to lag. In March, the unemployment rate rose slightly to 4.2%. This increase was accompanied by an astounding net gain of 232,000 jobs! The resilience of the labor market contrasts with recent announcements from several high-profile companies that have initiated job cuts this year. Prominent companies including Workday, Dow, CNN, Starbucks, Southwest Airlines, and Meta have recently announced rounds of layoffs.
In addition to the loss of private sector jobs, the impact of federal government staff cuts is being felt outside of Washington, D.C. President Donald Trump’s attempts to abdicate responsibility for much of the federal workforce are already taking shape in some agencies. The Small Business Administration, Veterans Affairs, and Department of Education are just a few of the agencies where personnel will face cuts.
Despite clear signs of weakening in targeted sectors of the economy, conditions across the labor market are still positive. Worries remain about a potential global economic downturn that might change the current state of play in a tight labor market. Analysts are closely monitoring these developments as businesses navigate their workforce needs amid uncertainty.
