U.S. jobless claims edged higher last week, hitting 243,000 from the prior week’s 223,000, according to the Labor Department.
This marks the eighth consecutive week claims surpassed 220,000—a level the Federal Reserve sees as indicative of a cooling, yet stable labor market.
The Fed, having raised interest rates 11 times since March 2022 to combat soaring inflation post-COVID-19, aims to temper wage growth and ease economic overheating.
Chris Larkin, E-Trade’s managing director, remarked, “The Fed asked to see more evidence of a cooling economy, and for the most part, they’ve gotten it. Add today’s weekly jobless claims to the list of rate-cut-friendly data points.”
Despite the uptick in unemployment claims, a rate cut at the Fed’s upcoming meeting seems unlikely. Most analysts are eyeing a potential cut in September.
The number of Americans receiving unemployment benefits also rose, reaching 1.87 million for the week of July 6—the highest since November 2021. This increase suggests a tougher job market for those on unemployment.
Various sectors have faced job cuts recently, from agricultural giant Deere to media outlets like CNN. The four-week average of claims, smoothing out weekly fluctuations, climbed to 234,750.
Strong consumer demand and a resilient labor market have so far warded off the recession many economists anticipated amid the Fed’s aggressive rate hikes.
With inflation easing, the Fed’s goal of a “soft landing”—reducing inflation without triggering a recession—seems achievable.
Yet, hints of labor market softening are emerging. June saw the unemployment rate inch up to 4.1%, despite employers adding 206,000 jobs.
Job postings in May nudged up to 8.1 million, while April’s figures were revised down to 7.9 million, marking the first dip below 8 million since February 2021.
The road ahead is still uncertain, but for now, the labor market’s resilience offers a beacon of hope amidst economic turbulence.
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