The number of Americans filing new applications for unemployment benefits rose to an 11-month high last week, indicating some softness in the labor market, although jobless claims tend to fluctuate around this time each year.
Initial claims for state jobless benefits rose 14,000 to a seasonally adjusted 249,000 for the week ended July 27, the highest level since August of last year, the Labor Department reported on Thursday. Economists polled by Reuters had forecast 236,000 claims for the latest week.
Claims have been on an upward trend since June, with some of the volatility related to the temporary shutdown of motor vehicle factories for restructuring and disruption caused by Hurricane Beryl in Texas.
Although claims topped the 194,000-245,000 range for the year, layoffs remained generally low. Government data on Tuesday showed the unemployment rate in June was the lowest in more than two years. Weakness in the labor market is driven by low hiring as Federal Reserve interest rate hikes in 2022 and 2023 dampen demand.
A separate report on Thursday from global placement firm Challenger, Gray & Christmas showed planned job cuts by US-based companies fell 47% to 25,885 in July. Companies have announced 460,530 job cuts so far this year, down 4.4% from the same period last year. However, they plan to hire 3,676 workers in July. So far this year, employers have announced plans to hire 73,596 workers, the lowest number so far this year since 2012.
Federal Reserve Chairman Jerome Powell said on Thursday that although he sees changes in the labor market and policymakers are "watching closely to see if it starts to show signs that it's more than that."
The US central bank on Wednesday kept its benchmark overnight interest rate in the 5.25%-5.50% range, where it has been since last July, but opened the door to cutting borrowing costs as early as its next meeting in September.
The number of people receiving benefits after the initial aid week, a proxy for hiring, rose 33,000 to a seasonally adjusted 1.877 million in the week ended July 20, based on the claims report.
This claims data has no impact on the employment report for July because it is outside the study period. The government is expected to report on Friday that nonfarm payrolls rose by 175,000 jobs last month after rising by 206,000 in June. The unemployment rate is forecast to be unchanged at 4.1%, having risen for three consecutive months.
