Continuing jobless claims rose to 1.88 million for the week that ended July 20, per Labor Department data.
The number of Americans filing for unemployment benefits rose to an 11-month high last week, while the number of U.S. workers continuing to collect unemployment benefits rose to a multiyear high, delivering a fresh sign of labor market weakness.
The reading was higher than the 236,000 market analysts expected and is the highest level in nearly a year.
Continuing jobless claims, which reflect the number of Americans continuing to collect unemployment benefits after filing an initial claim, rose to 1.88 million for the week ended on July 20, per the Labor Department data. That’s the highest level since Nov. 27, 2021, when that figure stood at 1.89 million.
Federal Reserve Chair Jerome Powell said at a July 31 press conference that the central bank’s interest rate policy has led to some obvious cooling in the jobs market, with labor-related supply and demand conditions now in “better balance.” That’s Fed code for a labor market that’s solid but no longer tight, helping inflation ease closer to the Fed’s target and giving the central bank more room to consider rate cuts.
“A broad set of indicators suggests that conditions in the labor market have returned to about where they stood on the eve of the pandemic: strong, but not overheated,” Powell said.
The Fed chief said policymakers are aware that labor market-related risks have increased and that if unemployment were to spike unexpectedly, the central bank is “prepared to respond” with rate cuts.
Monthly job gains have slowed but remain generally stable, with consensus estimates predicting that the U.S. economy created 175,000 new jobs in July and for the unemployment rate to hold steady at 4.1 percent when the Labor Department releases its closely watched nonfarm payrolls report on Aug. 2.
Greg McBride, chief financial analyst at Bankrate, told The Epoch Times in an emailed statement that the Fed’s remarks suggest that policymakers are teeing up a quarter-point rate cut at their next meeting in September but if the labor market weakens unexpectedly, the cut could be bigger.
“There are no less than 4 changes in wording within the Fed’s statement that acknowledges the evolving picture in the job market,“ McBride said. ”If the job market should show evidence of cooling off at an alarming pace between now and the September Fed meeting, the first rate cut could be a larger half-point cut. There would be plenty of advance notice if this should come to pass.”