The number of Americans filing for unemployment benefits hit a one-year high last week, even as the labor market remains surprisingly healthy in an era of high interest rates.
Applications for unemployment benefits for the week ended July 27 rose 14,000 to 249,000, compared with 235,000 the previous week, the Labor Department said Thursday. That was the biggest increase since the first week of August last year and the 10th straight week that claims have topped 220,000. Before that stretch, claims had been below that level for all but three weeks this year.
Weekly jobless claims are seen by many as a proxy for layoffs, and while they have been slightly higher over the past two months, they remain at historically healthy levels.
Strong consumer demand and a resilient labor market have helped stave off a recession that many economists had been predicting during the Federal Reserve’s broad wave of interest rate hikes beginning in March 2022.
As inflation continues to ease, the Fed’s goal of achieving a soft landing — that is, reducing inflation without causing a recession and a wave of mass layoffs — appears to be within reach.
The Fed left its benchmark rate unchanged on Wednesday, but policymakers gave strong signals that it could be cut in September if data maintained its recent path. And recent labor market data indicate some softening.
The unemployment rate rose slightly to 4.1% in June, even though US employers added 206,000 jobs. US job openings also fell slightly last month. Add to this the high number of layoffs and the Fed could be preparing to cut interest rates next month, as most analysts expect.
Source: AP.