The Labor Department's filing rate rose higher than expected last week, an early indication that the labor market is beginning to soften as a result of higher borrowing costs.
The Labor Department released its initial claims for the week-end April 29 at 242,000, more than the 2019 pre-pandemic average of 218,000 claims. The highest level was recorded the past week, which was revised slightly lower to 229,000.
The number of claims filed by Americans who are consecutively receiving unemployment benefits fell slightly to 1.8 million for the week ended April 22, a decrease of 38,000 from the previous week.
The labor market remained a strong point in the slowdown, despite an aggressive interest-rate hike campaign by the government.
But there are signs it's starting to cool down.
The number of job openings in the sector is increasing and layoffs are decreasing. Although hiring in the private sector rose faster than expected in April, jobless claims are also rising. The economy is predicted to increase in unemployment due to steeper interest rates, which could and businesses decide to pull back on spending.
The most recent projections from the Fed show that unemployment will increase to 4.6% by the end of this year, up from the current rate of 3.5%.
This could mean that more than 1 million Americans will lose their jobs between now and the end of the year.
Politicians approved the 10th straight rate hike on Wednesday, lifting the Federal Reserve's federal funds rate to the highest level since August 2007. However, they also opened the door to a pause in tightening at the next meeting, although Chair Jerome Powell emphasised the importance of upcoming economic data releases.
The April jobs report has been closely watched by the federal government, which is expected to show that employers had hired just 179,000 employees following a gain of a gain.
The unemployment rate is forecasted to rise to 3.6%.