Last week, the number of Americans filing applications for unemployment benefits for the first time increased to an 11-month peak, indicating that the labor market was softening, although claims around this time of the year tend to be volatile.
Thursday’s report from the Labor Department also showed that in mid-July, the number of people on jobless rolls rose to the highest level since 2021. This may fuel fears of a fast labor market decline, which started last month due to data showing the unemployment rate in June rose to a 2.5-year high of 4.1%.
Although the report supported an interest rate cut in September, many economists urged against attaching too much significance to the increase in claims and argued that altering the data to cater for seasonal fluctuations was challenging in summer due to automobile plants closing temporarily for retooling.
On Wednesday Federal Reserve Chair Jerome Powell told reporters that although he saw the labor market changes as generally consistent with a process of normalization, policymakers were monitoring closely to determine whether it started to show signs that it was more than that.
First-time claims for state unemployment benefits rose by 14K to a seasonally adjusted 249K for the week that ended on July 27, the highest level since August 2023.
