US weekly jobless claims rise moderately; layoffs drop to 11-month low
THE number of Americans filing new claims for unemployment benefits rose slightly last week, while layoffs dropped to an 11-month low in July amid tight labour-market conditions.
Initial claims for state unemployment benefits increased by 6,000 to a seasonally adjusted 227,000 for the week ended Jul 29, the Labor Department said on Thursday (Aug 3). Economists polled by Reuters had forecast 227,000 claims for the latest week.
The labour market has largely weathered 525 basis points in interest-rate hikes from the Federal Reserve since March 2022. Claims are in the lower end of their range of 194,000 to 265,000 for this year, in part benefiting from difficulties adjusting the data for seasonal patterns.
Automakers typically idle plants in July to retool for new models. But these temporary closures do not always happen around the same time, which could throw off the model that the US government uses to strip out seasonal fluctuations from the data.
Nevertheless, the overall labour market remains solid, as employers hoard workers after struggling to find labour during the Covid-19 pandemic. While there have been high-profile layoffs in the technology and finance sectors, small businesses are still boosting headcount after being squeezed out by large enterprises snapping up workers.
Labour-market strength and receding inflation are fanning optimism that the economy could avoid a recession.
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The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased by 21,000 to 1.7 million during the week ended Jul 22, the claims report showed. These so-called continuing claims remain low by historical standards, indicating that some laid-off workers are experiencing short spells of unemployment.
The Labor Department reported on Tuesday that there were 1.6 job openings for every unemployed person in June, little changed from May. The claims data have no bearing on July’s employment report, which is scheduled to be released on Friday.
Non-farm payrolls likely increased by 200,000 in July after rising by 209,000 in June, according to a Reuters poll of economists. The unemployment rate is forecast to be unchanged at 3.6 per cent in July.
Though a survey from the Institute for Supply Management this week showed a measure of manufacturing employment plummeted to a three-year low in July, other data supports another month of solid payrolls gains.
The ADP’s national employment report on Wednesday pointed to strong private hiring last month, and the Conference Board’s consumer confidence survey showed households are bullish on the labour market.
That was reinforced by a separate report on Thursday from global outplacement firm Challenger, Gray & Christmas that showed US-based employers announced 23,697 cuts in July, the lowest number since August 2022. Layoffs were down 42 per cent from June.
“Companies, weary of letting go of needed workers, are finding other ways to cut costs,” said Andy Challenger, senior vice-president at Challenger, Gray & Christmas. “Many have slowed hiring.”
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