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As the labor market remains tight, the number of Americans submitting new applications for unemployment benefits increased marginally last week, while the number of layoffs decreased to an 11-month low in July.
According to information issued by the Labor Department on Thursday, the number of initial applications for state unemployment benefits climbed by 6,000 to a seasonally adjusted 227,000 for the week ending July 29. 227,000 claims were predicted by economists surveyed by Reuters for the most recent week.
Since March 2022, the Federal Reserve has increased interest rates by 525 basis points, which has generally been tolerated by the labor market. This year’s claims are at the lower end of the 194,000–265,000 range, in part due to challenges in accounting for seasonal variations in the data.
In July, automakers routinely shut down their factories to retool for new models. Nevertheless, these brief closures may not always take place at the same time, which may cause problems for the government’s approach for removing seasonal variations from data.
Despite this, the labor market as a whole is still strong as businesses stockpile personnel in the wake of the COVID-19 pandemic’s labor shortage. Although there have been notable layoffs in the banking and technology industries, small businesses are still adding employees despite being forced out by larger companies snatching up people.
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Signs of Economic Resilience
The strength of the labor market and declining inflation are fostering hope that the economy will avoid a recession.
According to the claims report, the number of people getting benefits after the first week of assistance—a proxy for hiring—rose by 21,000 to 1.700 million in the week ending July 22.
By to historical standards, these so-called continuing claims are still modest, suggesting that some laid-off employees only experience brief periods of unemployment.
According to data released by the Labor Department on Tuesday, there were 1.6 vacant positions for every unemployed individual in June, barely changing from May. The July employment report, which is due out on Friday, is unaffected by the claims data.
According to a Reuters poll of experts, nonfarm payrolls likely grew by 200,000 jobs in July after increasing by 209,000 in June. In July, the unemployment rate is anticipated to stay the same at 3.6%.
Despite a poll released this week by the Institute for Supply Management showing a three-year low in manufacturing employment in July, other data point to another month of strong payroll growth.
Wednesday’s national employment report from the ADP indicated that private hiring was robust in the previous month, and the Conference Board’s consumer confidence survey revealed that households had a positive outlook on the labor market.
A different survey released on Thursday by the international outplacement agency Challenger, Gray & Christmas showed that companies in the United States reported 23,697 layoffs in July, the fewest since August 2022. From June, layoffs were down 42%.
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Source: Reuters
