WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits increased moderately last week, pointing to only a gradual easing in labor market conditions.
Initial claims for state unemployment benefits rose 12,000 to a seasonally adjusted 248,000 for the week ended July 1, the Labor Department said on Thursday. Economists polled by Reuters had forecast 245,000 claims for the latest week.
Claims jumped to a 20-month high in the first three weeks of June amid a broadening in layoffs beyond the technology sector and interest rate-sensitive industries like housing and finance. Minnesota recently extended eligibility for state unemployment benefits to tens of thousands hourly paid school workers during the summer break, also contributing to the rise in filings.
The surge was reversed towards the end of the month, which some economists attributed to the Juneteenth holiday. Others, however, argued that the impact of the new holiday was unknown.
Claims, relative to the size of the labor market, are below the 280,000 level that economists say would signal a significant slowdown in job growth. Employment growth has averaged 314,000 jobs per month this year.
The labor market has remained resilient despite 500 basis points worth of interest rate hikes from the Fed since March 2022, when the U.S. central bank embarked on its fastest monetary policy tightening campaign in more than 40 years to stamp out inflation. A survey last month showed consumers’ views of the labor market more upbeat in June relative to May.
Minutes of the Fed’s June 13-14 policy meeting published on Wednesday showed “almost all participants” agreed to hold interest rates steady at that gathering. Though policymakers viewed the labor market as remaining “very tight,” they “anticipated that employment growth would likely slow further.”
The number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 13,000 to 1.720 million during the week ending June 24, the claims report showed.
The so-called continuing claims remain very low by historical norms, indicating that some laid off workers were experiencing shorter spells of unemployment.
The claims data has no bearing on June’s employment report, scheduled for release on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 225,000 jobs last month after rising 339,000 in May. The unemployment rate is forecast slipping to 3.6% from 3.7% in May.
Persistent labor market strength was underscored by a separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showing U.S.-based employers announced 40,709 job cuts in June, down 49% from May.
Andrew Challenger, senior vice president at Challenger, Gray & Christmas, said companies tended to announce fewer job cuts in June, but added that “it is also possible that the deep job losses predicted due to inflation and interest rates will not come to pass, particularly as the Fed holds rates.”
Companies announced 187,793 layoffs in the second quarter, down 31% from the January-March period’s tally.
(Reporting by Lucia Mutikani; additional reporting by Safiyah Riddle; Editing by Chizu Nomiyama)
