The number of Americans filing for unemployment benefits jumped to its highest level in a year last week, even as the labor market remains surprisingly healthy in an era of high interest rates.
Jobless claims for the week ending July 27 climbed by 14,000 to 249,000, from 235,000 the previous week, the Labor Department reported Thursday. It’s the most since the first week of August last year and the 10th straight week that claims have come in above 220,000. Before that stretch, claims had remained below that level in all but three weeks this year.
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Weekly unemployment claims are widely considered as representative of layoffs, and though they have been slightly higher the past couple of months, they remain at historically healthy levels.
Strong consumer demand and a resilient labor market has helped to avert a recession that many economists forecast during the extended flurry of rate hikes by the Federal Reserve that began in March of 2022.
As inflation continues to ease, the Fed’s goal of a soft-landing — bringing down inflation without causing a recession and mass layoffs — appears within reach.
On Wednesday, the Fed left its benchmark rate alone, but officials hinted strongly that a cut could come in September if the data remained on its recent trajectory. And recent data from the labor market suggest some weakening.
The unemployment rate ticked up to 4.1% in June, despite the fact that America’s employers added 206,000 jobs. U.S. job openings also fell slightly last month. Add that to elevated layoffs and the Fed could be poised to cut interest rates next month, as most analysts expect.
The four-week average of claims, which smooths out some of the weekly ups and downs, rose by 2,500 to 238,000.
The total number of Americans collecting unemployment benefits for the week of July 20 jumped by 33,000 to 1.88 million. The four-week average for continuing claims rose to 1,857,000, the most since December of 2021.
Continuing claims have been on the rise in recent months, suggesting that some Americans receiving unemployment benefits are finding it more challenging to land jobs.
There have been job cuts across a range of sectors this year, from the agricultural manufacturer Deere, to media outlets like CNN, and elsewhere.