US Jobless Claims Rise Along With Labor Costs

U.S. unemployment claims climbed last week — as did the cost of labor — as productivity fell.

That’s according to government data released Thursday (May 4,) which showed applications for unemployment benefits — widely seen as an indicator of layoffs — rose by 13,000 for the week ending April 29, to 242,000, according to the U.S. Labor Department.

Separate data from the Bureau of Labor Statistics showed labor productivity falling 2.7% during this year’s first quarter, “as output increased 0.2 percent and hours worked increased 3.0 percent.”

The labor market remains tight, however, according to data from the Labor Department data released earlier in the week showing 1.6 job openings for every unemployed person.

Those same figures showed U.S. layoffs reaching their highest level in more than two years, and the number of new job openings declining.

Job losses increased to a seasonally-adjusted 1.8 million in March, versus 1.6 million in February, driven by layoffs in the construction, professional services, leisure and hospitality and health and education sectors.

Meanwhile, employers reported 9.6 million job openings for the month. As noted here last month, that number hasn’t fallen below 10 million since May 2021.

As PYMNTS wrote recently, companies are seeking to preserve operating margins and please profitability-focused investors, which has led to staffing reductions at businesses that expanded their headcounts during the pandemic, such as Meta, Amazon and Lyft.

However, the shift is also happening in other industries as well, with a range of companies including manufacturer 3M, retailer Gap and fast-food giant McDonald’s all cutting jobs.

Elsewhere on the jobs front, private employers continued hiring heavily in April, though wage growth slowed down, according to ADP’s monthly National Employment Report.

Released Wednesday, the report shows that employers added 296,000 jobs last month in “a burst of hiring” while pay increases for workers switching jobs slowed down.

“The slowdown in pay growth gives the clearest signal of what’s going on in the labor market right now,” said Nela Richardson, chief economist at ADP. “Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines. Our data also shows fewer people are switching jobs.”

According to the report, wage growth continued a slowdown that began nearly a year ago, with job changes in particular seeing a sharp drop: pay for workers changing jobs slowed from 14.2% growth to 13.2% growth, the slowest pace since November of 2021.