The number of Americans who applied for unemployment benefits last week rose slightly to 227,000 after falling to a five-month low. This indicates that layoffs are low and the labor market remains robust. New jobless claims increased by 6,000 from a revised 221,000. The prior week’s reading was the lowest since February.
Unemployment claims typically rise during economic weakening and approaching recessions. However, even though claims have surpassed a historic bottom, they still demonstrate a low number of layoffs in the surprisingly resilient U.S. economy.
The steady increase in new U.S. jobs and the scarcity of layoffs have given hope to Federal Reserve officials regarding their ability to slow inflation without pushing the economy into a recession. Usually, when the Fed raises interest rates to contain inflation, it leads to an economic downturn.
As long as most people are employed, they are likely to spend enough money to sustain the expansion of the economy.
The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) were set to open lower in Thursday trades.