On Thursday, July 18, the United States Department of Labor released the latest weekly report on initial jobless claims for the first week of July, showing a larger-than-expected increase in the number of people applying for unemployment benefits, reaching the highest level in two and a half years. This is consistent with the recent rise in the unemployment rate.
According to the latest report from the Department of Labor, for the week ending July 13, the seasonally adjusted initial jobless claims rose to 243,000, an increase of 20,000 from the revised number of the previous week which was adjusted from 222,000 to 223,000, representing an increase of 1,000 compared to the unrevised figure.
For the week ending July 6, the number of people receiving unemployment benefits increased by 20,000 compared to the previous week, reaching 1.867 million, the highest level since November 27, 2021.
Citing a report from Nancy Vanden Houten, Chief U.S. Economist at Oxford Economics, Reuters stated, “Stepping back from the noise of the data, initial jobless claims have been trending higher since the beginning of this year. We believe this upward trend is consistent with a cooling labor market, characterized more by a slowdown in hiring rather than an increase in layoffs.”
Last week, the unadjusted number of initial claims increased by 15.2% to reach 279,032. Texas saw the largest increase in initial claims, up by 11,537 people, making it the state with the largest increase in the week ending July 13.
Analysts cited by Reuters noted that the temporary surge in initial claims in Texas last week was influenced by Hurricane Beryl and is expected to dissipate as the impact of natural disasters recedes.
Furthermore, California, which had the second-highest increase, saw initial claims rise by 6,917. The state leads the nation in the number of people receiving unemployment benefits, with 414,330 recipients.
Over the past year, the Federal Reserve has kept the benchmark interest rate in the current range of 5.25% to 5.50%. Since 2022, the Fed has raised the policy rate by 525 basis points. Analysts suggest that the slowing labor market and easing inflation may prompt the Fed to lower rates in September, with further rate cuts expected in November and December.
Financial markets anticipate further rate cuts in November and December.