Unemployment Claims Hit Highest Level Since October 2021

U.S. unemployment claims reached an almost two-year high last week amid ongoing layoffs.

Figures released Thursday (June 8) by the Department of Labor showed initial jobless claims increasing by 28,000 from the previous week to 261,000, the highest number of initial claims since late October 2021, when it was at 264,000.

The news follows a report last week showing 80,089 job cuts by U.S.-based employers in May — primarily in the tech sector — a figure that was 20% higher than that in April and 287% higher than the number announced a year earlier.

“Consumer confidence is down to a six-month low, and job openings are flattening,” said Andrew Challenger, labor expert and senior vice president at employment service Challenger, Gray and Christmas, which compiled the report “Companies appear to be putting the brakes on hiring in anticipation of a slowdown.”

Most industries have seen an increase in layoffs this year, with only education, government, industrial manufacturing and utilities being spared, according to the report.

Meanwhile, this week brought the news that advertised wage growth has begun slowing in most job categories, with software development being particularly weak.

Based on wages and salaries advertised with employment website Indeed, the posted wages in the United States rose 5.3% year over year in May — down from a peak of 9.3% in January 2022 — according to a report by Indeed Hiring Lab.

“While still very strong compared to historic norms, annual growth in advertised wages in the U.S. has dropped by almost half from its early 2022 peak, and could fall to pre-pandemic levels as soon as the end of this year, or early 2024,” wrote Nick Bunker, economic research director for North America at Indeed Hiring Lab.

In 2019, posted wage growth ran at an average rate of 3.1%, the report said. The pullback in wage growth is occurring across most occupational categories, with just 29% of sectors seeing wage growth that is the equal or greater than it was six months earlier, the report said.

“Software development — a sector highly exposed to recent high-profile layoffs and hiring freezes in the tech sector — is a good example of weakness,” Bunker wrote in the report. “Not only have job postings for that sector dropped by almost 60% over the past year, but posted wage growth is also currently less than half of what it was in November.”