Jobless Claims in the US Reach One-Year High

The amount of Americans applying for jobless benefits surged to its peak level in a year last week, even as the workforce remains surprisingly robust in a period of elevated interest rates.

Unemployed claims for the week concluding July 27 rose by 14,000 to 249,000, from 235,000 the prior week, as reported by the Labor Department on Thursday. It’s the highest number since the initial week of August last year and the 10th consecutive week that claims have exceeded 220,000. Prior to that streak, claims had stayed below that threshold in all but three weeks this year.

Weekly jobless claims are widely viewed as indicative of job cuts, and despite being slightly elevated in the past few months, they are still at historically sound levels.

Robust consumer demand and a resilient workforce have helped to prevent a recession that many economists predicted during the prolonged series of rate hikes by the Federal Reserve that commenced in March of 2022.

As inflation continues to diminish, the Fed’s objective of a soft-landing — reducing inflation without triggering a recession and widespread job cuts — seems achievable.

On Wednesday, the Fed maintained its benchmark rate, but officials indicated strongly that a reduction could be imminent in September if the data remains on its recent path. And recent data from the job market suggest some weakening.

The jobless rate increased to 4.1% in June, despite the fact that U.S. employers added 206,000 jobs. Job vacancies in the U.S. also slightly decreased last month. Coupled with elevated layoffs, the Fed may be ready to reduce interest rates next month, in line with the expectations of most analysts.

The four-week average of claims, which smooths out some of the weekly fluctuations, increased by 2,500 to 238,000.

The total number of Americans receiving unemployment benefits for the week of July 20 surged by 33,000 to 1.88 million. The four-week average for ongoing claims rose to 1,857,000, the highest since December of 2021.

Ongoing claims have been on the rise in recent months, indicating that some Americans receiving unemployment benefits are encountering more difficulty in securing jobs.

There have been workforce reductions across various sectors this year, from the agricultural manufacturer Deere, to media outlets like CNN, and elsewhere.