Claims have been trending upward since June. | Photo: Bloomberg
The number of Americans filing new claims for unemployment benefits rose last week to an 11-month high, signaling some easing in the labor market, though claims are typically unpredictable at this time of year.
Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 249,000 for the week ended July 27, the highest level since August last year, the Labor Department said on Thursday. Economists polled by Reuters had forecast 236,000 claims for the latest week.
Claims have been on an upward trend since June, partly attributed to volatility caused by temporary shutdowns of auto plants for rebuilding and disruptions caused by Hurricane Beryl in Texas.
While claims rose above the high end of their 194,000-245,000 range for this year, layoffs remain low overall. Government data on Tuesday showed the layoff rate in June was the lowest in more than two years. The labor market slowdown is being driven by weak hiring as the Federal Reserve’s rate hikes in 2022 and 2023 dampen demand.
A separate report Thursday from global outplacement firm Challenger, Gray & Christmas showed that planned layoffs by U.S. companies fell 47 percent to 25,885 in July. Companies have announced 460,530 layoffs so far, down 4.4 percent from the same period last year. However, they planned to hire 3,676 workers in July. So far this year, employers have announced plans to hire 73,596 workers, the lowest total since 2012.
Federal Reserve Chairman Jerome Powell told reporters on Wednesday that while he saw the changes in the labor market as “broadly consistent with a normalization process,” policymakers were “watching closely to see if there are signs that it’s more than that.” The U.S. central bank on Wednesday kept its key interest rate at the 5.25-5.50 percent range overnight, where it has been since July last year, but opened the door to cutting borrowing costs as soon as its next meeting in September.
The number of people receiving benefits after a first week of help, a measure of the number of workers, rose by 33,000 to a seasonally adjusted 1.877 million in the week ended July 20, the claims report showed.
The claims data will not affect the July jobs report because it falls outside the survey period. The government is expected to report Friday that nonfarm payrolls rose by 175,000 jobs last month, after a gain of 206,000 in June.
The unemployment rate is expected to remain unchanged at 4.1 percent, an increase over the past three months.
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First print: Aug 01, 2024 | 6:38 PM IST