The number of Americans filing for unemployment benefits hit its highest level in a year last week, even as the labor market remains surprisingly healthy at a time of high interest rates.
Jobless claims for the week ending July 27 rose 14,000 to 249,000 from 235,000 the previous week, the Labor Department said Thursday. That was the highest number since the first week of August last year and the 10th straight week that claims have topped 220,000. Before that, claims had been below that level for all but three weeks this year.
Weekly jobless claims are widely viewed as representative of layoffs, and while they have been slightly higher in the past two months, they remain at historically healthy levels.
Strong consumer demand and a resilient labor market have helped avert a recession that many economists predicted during the Federal Reserve’s extended wave of rate hikes that began in March 2022.
As inflation continues to fall, the Fed’s goal of a soft landing – bringing down inflation without triggering a recession or mass layoffs – appears within reach.
The Fed left its benchmark rate unchanged on Wednesday, but officials strongly suggested a cut could come in September if data stays on its recent trajectory. And recent labor market data suggests some weakening.
The unemployment rate climbed to 4.1% in June, despite the creation of 206,000 jobs in the United States. Job openings also fell slightly in the United States last month. Add to that the massive layoffs and the Fed could be ready to cut interest rates next month, as most analysts expect.
The four-week average of claims, which smooths out some weekly fluctuations, rose 2,500 to 238,000.
The total number of Americans receiving unemployment benefits for the week of July 20 increased by 33,000 to 1.88 million. The four-week average of ongoing claims is 1,857,000, the highest level since December 2021.
Jobless claims have been rising in recent months, suggesting that some Americans receiving unemployment benefits are having a harder time finding work.
Job cuts have occurred across many industries this year, from agricultural manufacturer Deere to media outlets like CNN and elsewhere.
