According to data released by the U.S. government this Thursday, the number of initial applications for unemployment benefits increased last week nationwide, but the number of layoffs remained at healthy levels compared to the past few years.
The U.S. Department of Labor data released on August 6 showed that the seasonally adjusted number of Americans applying for unemployment benefits for the week ending August 1 increased by 1,000 to 199,000. The prior week’s revised initial claims were also up 1,000 to 198,000.
The report from the Labor Department also indicated that the four-week moving average of initial claims, which smooths out some weekly data fluctuations, fell by 4,500 to 198,750.
For the week ending July 25, the seasonally adjusted number of continuing claims for unemployment benefits stood at 1,801,000, a preliminary increase of 24,000 from the previous week’s revised figure.
The weekly number of initial claims for unemployment benefits serves as a real-time indicator of overall layoffs and is considered to reflect the health of the U.S. job market.
The latest data on personal consumption expenditures (PCE), the Federal Reserve’s preferred inflation gauge, showed a 3.7% increase in June, well above the Fed’s 2% target. Fed officials have indicated that if inflation remains high, they are prepared to raise interest rates to curb rising prices.
Raising interest rates would increase business costs, potentially dampening business hiring intentions.
Last month’s government report revealed weak job growth in June, with employers adding only 57,000 jobs, less than half the total from the previous month, indicating a cautious approach by businesses in expanding their workforce. The unemployment rate dropped from 4.3% in May to 4.2% in June, but this decline was largely due to many unemployed individuals giving up on job search efforts and no longer being counted in the labor force.
While job growth was lackluster in June, the preceding three months saw significant increases in employment, alleviating concerns that tensions with Iran could further worsen the labor market. The employment report for July is set to be released on Friday by the government.
Since the U.S. economy emerged from the COVID-19 pandemic recession, weekly initial claims for unemployment benefits have stabilized, mostly fluctuating between 200,000 and 250,000. However, about two years ago, the pace of hiring started to slow down.
Recent companies announcing layoffs include Verizon, UPS, Amazon, Disney, Starbucks, Walmart, and Microsoft.