September 9th 2023.
According to The Associated Press, the number of Americans applying for unemployment benefits has surprisingly reached its lowest point in the past seven months, despite climbing interest rates that were put in place to slow the growing labor market. Last week, ending on September 2, the numbers were surprisingly resilient to recent business trends.
A September 7 report from the Labor Department stated that U.S. applications for “jobless claims fell by 13,000 to 216,000″ last week. This means that fewer people are being laid off. In total, “1.68 million people were collecting unemployment benefits the week that ended August 26, about 40,000 fewer than the previous week. This is the lowest since a stretch in early January.”
The U.S. economy has been naturally adding nearly 250,000 jobs per month following their surge from the COVID-19 pandemic, with employers adding 187,000 job openings in August and the unemployment rate settling at 3.8%, which is historically low for this time of year. The Labor Department’s report also showed that companies have had a high retention rate for their employees, outside of an increased number of layoffs in the “technology sector” earlier this year.
The high retention rates have been unusually stubborn in spite of the Federal Reserve raising interest rates to 5.4%, the highest it’s been in over 20 years. The Reserve is attempting to bring down wages and slow job market growth, and many economists were expecting the unemployment rates to increase in response. However, the market has been resilient.
One possible explanation for this could be that businesses are struggling to build their workforces to a reasonable level after the massive losses during the pandemic. This has resulted in companies replenishing their hiring power and retaining their employees in order to catch up with the demand from their consumers in the “pandemic recession.”
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