Unemployment Claims Rose Last Week

Filings for unemployment benefits have remained near historic lows since late 2021. The four-week average for claims, which smooths out volatility in the weekly figures, rose to 188,000 from the previous week’s revised 180,000. The four-week average reached 170,500 last month, its lowest point on records dating back to 1967.

Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, declined to 1.4 million for the week ended April 23 from the previous week’s level—the lowest level since January 1970. Continuing claims are reported with a one-week lag.

“Despite the increase, claims remain at levels that are consistent with extremely tight labor market conditions,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, wrote in a note. “Even as the economy slows in response to high inflation and rising interest rates, we expect employers will be more likely to slow the pace of hiring than to let go of workers.”

The low level of worker jobless claims is among several signs of a robust labor market that has strong job growth and high demand for workers.

The Labor Department on Friday will release April employment figures. Economists surveyed by The Wall Street Journal estimate employers added 400,000 jobs last month and that the unemployment rate ticked down to 3.5% from 3.6% the prior month.

Job gains have been above 400,000 each month since last May, the longest such streak since 1939, and the 3.6% unemployment rate in March was close to matching the low reached ahead of the pandemic.

Job openings and the number of times workers quit jobs were at record levels in March, the Labor Department said this week. That equaled to nearly two job openings for every unemployed person that month.

The tight labor market has put pressure on wages. Average hourly earnings, which were 5.6% higher in March compared with a year ago, though trailing behind inflation.

The Federal Reserve on Wednesday approved a rare half-percentage-point interest rate increase—the largest since 2000—as officials kicked into higher gear a campaign to slow inflation, which is running at a 40-year high, and cool the economy.

“It could be that faster wage growth is going to become more entrenched and firms are making more of a push to hold the labor that they already have and it’s obviously costing them more to do so,” said Richard Moody, chief economist at Regions Financial Corp.

Mr. Moody said employers also face higher costs for added benefits to recruit workers.

A recent survey of 1,500 workers by Employ Inc., a recruitment and talent-acquisition company, found that 67% want higher compensation and that only 37% feel like they are fairly paid by their employer.

“Cash is king today for the American worker,” said Pete Lamson, chief executive of Employ Inc. “But it’ll be a challenge if businesses struggle to continue to increase labor costs through wage increases and if they’re unable to pass those costs on to their customer base.”

The Labor Department in a separate report on Thursday said unit labor costs in the nonfarm business sector rose at an annual rate of 11.6% in the first quarter, offering another sign of inflationary pressures.

The increase in unit labor costs—how much a business pays its workers to produce a unit of output—reflected a 3.2% increase in hourly compensation and a 7.5% decline in productivity. Unit labor costs have increased 7.2% over the last four quarters, marking the largest increase since 1982.

—Sarah Chaney Cambon contributed to this article.

Write to Bryan Mena at [email protected]