Jobless claims rise to 11-month high

The variety of Americans filing recent claims for unemployment advantages rose last week to an 11-month high, suggesting some weakness within the labor market, though claims are typically volatile presently of 12 months.

Initial jobless claims rose by 14,000 to a seasonally adjusted 249,000 within the week ended July 27, the best level since August last 12 months, the Labor Department said on Thursday. Economists polled by Reuters had forecast 236,000 claims in the ultimate week.

Claims for sick leave have been rising since June, partly due to volatility related to the temporary closure of motorcar plants for modernization, in addition to disruptions attributable to Hurricane Beryl in Texas.

While applications have topped the high end of the 194,000-245,000 range this 12 months, layoffs remain low overall. Government data on Tuesday showed the June layoff rate was the bottom in greater than two years. The slowdown within the labor market is being driven by weak hiring because the Federal Reserve’s rate hikes in 2022 and 2023 dampen demand.

A separate report Thursday from global outplacement firm Challenger, Gray & Christmas showed planned job cuts at U.S. corporations fell 47% to 25,885 in July. Companies have announced 460,530 job cuts up to now, down 4.4% from the identical period last 12 months. However, 3,676 employees were planned to be employed in July. This 12 months, employers announced plans to hire 73,596 employees, the bottom year-to-date number since 2012.

Federal Reserve Chairman Jerome Powell told reporters on Wednesday that while he viewed labor market developments as “generally consistent with a normalizing process,” policymakers are “monitoring the situation closely to see if there are signs that this is something more.”

The US central bank maintained its policy on Wednesday overnight reference rate of interest within the range of 5.25%-5.50%, where it had remained since July last 12 months, but at the following meeting in September it opened the door to reducing borrowing costs.

The number of individuals receiving advantages after the primary week of aid, a measure of employment, rose by 33,000 to a seasonally adjusted level of 1.877 million within the week ended July 20, the claims report showed.

The claims data doesn’t affect the July jobs report since it doesn’t cover the period covered by the survey. The government is anticipated to report on Friday that nonfarm payrolls rose by 175,000 last month after rising by 206,000 in June.