Initial unemployment claims rose modestly to 197,000, while continuing claims declined and the jobless rate remained near 4%, reinforcing signs of a slower but still resilient labor market.
By yourNEWS Media Newsroom
The number of Americans filing for unemployment benefits remained near historically low levels last week, indicating that employers are still avoiding widespread layoffs even as hiring slows.
Initial jobless claims increased by 9,000 to 197,000 for the week ending July 25, according to Labor Department data released July 30. The previous week’s total was revised slightly higher to 188,000, which remained the lowest reading since early 1969.
The four-week moving average, which reduces the effect of short-term volatility, fell to 202,750, its lowest level in more than two months.
The claims data point to a labor market that has lost momentum without deteriorating sharply. Economists have described current conditions as “low fire, low hire,” with companies reluctant to add workers aggressively but also showing little appetite for major job cuts.
Job growth slowed considerably in June, when employers added 57,000 positions, well below the three-month average of 164,000.
Private-sector hiring has also weakened since accelerating during the spring. Payroll processor ADP reported that private employers added an average of 15,000 jobs per week during the four weeks ending July 11, marking a fifth consecutive weekly slowdown.
RBC Economics said the unemployment rate may provide a clearer picture of the labor market than monthly job creation figures. The jobless rate stood at 4.2% in June, while the Federal Reserve Bank of Chicago projected it would ease to 4.1% in July.
“We’re long-time believers that structural forces should keep the US labor market tight,” RBC economists said.
“A shrinking labor force and structural needs for hiring in health care mean the unemployment rate in our base case should stick close to 4.3 percent for the remainder of the year.”
The number of jobs needed each month to prevent the unemployment rate from rising has fallen close to zero because immigration has slowed and more people are leaving the workforce, according to the analysis.
Excluding the pandemic years of 2020 and 2021, the labor force participation rate is now at its lowest point since the 1970s. A smaller labor supply can keep unemployment low even when payroll growth weakens.
Continuing claims, which measure the number of people receiving unemployment benefits after an initial filing, declined for the third consecutive week to 1.782 million, below expectations.
The drop could indicate that unemployed workers are finding jobs more quickly. It may also partly reflect claimants exhausting their eligibility, since many states limit benefits to 26 weeks.
“Overall, the labor market appears to be cooling but not weakening. Payroll growth slowed to a more sustainable pace, wage growth remains consistent with a balanced labor market, and the unemployment rate remains historically low,” Jamie Zendel, strategist at Mutual of America Capital Management, said in a recent research note.
The latest employment figures arrived as the Federal Reserve placed renewed emphasis on inflation following its July policy meeting.
The central bank voted 9–3 to leave its benchmark interest rate unchanged after its two-day meeting concluded July 30. Federal Reserve Chairman Kevin Warsh focused much of his post-meeting news conference on price pressures rather than labor-market weakness.
“I want to stress, of course, that decisions by this committee matter a great deal, and where necessary and appropriate, we will not hesitate to act,” Warsh told reporters.
His remarks reinforced market expectations that the Fed could raise interest rates at its September meeting if inflation remains elevated.
Economists at Indeed Hiring Lab said employment conditions are likely to receive less attention from policymakers in the near term unless the labor market weakens materially.
“Amidst all the ambiguity, one thing is clear: the trajectory of prices, not the labor market, will determine which policy scenario prevails in the short run. For now, the labor market is playing second fiddle, while inflation has first chair,” they wrote in a July 29 note.
The Federal Open Market Committee is scheduled to meet again for two days in mid-September. Until then, policymakers will continue weighing persistent inflation risks against evidence that hiring is slowing while layoffs and unemployment remain comparatively low.
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