The number of Americans filing new claims for unemployment insurance rose slightly last week, suggesting some easing in a historically tight labour market.
Initial claims for state unemployment increased by 6,000 to 260,000 in the week ended on July 30, Labor Department data showed on Thursday. The week ending on July 23 saw a rise in continuing requests for state benefits to 1.42 million, the highest number since early April.
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The claims data comes ahead of Friday’s jobs report, which will show how many jobs the US added in July and whether the unemployment rate held at a near a 50-year low.
According to a Reuters news agency survey of economists, non-farm payrolls likely increased by 250,000 jobs last month after rising by 372,000 in June.
Unemployment claims have been on the rise in the last few months as companies, particularly in the technology sector, announce layoffs and stall hiring due to growing economic uncertainty.
Other data from the Labor Department this week showed that the number of job openings fell in June to a nine-month low, suggesting that labour market tightness may be loosening up amid mounting economic challenges.
As the Federal Reserve intensifies its commitment to stop the highest inflation since 1981 by continuing to raise borrowing costs, which in turn will likely reduce the demand for labour, the trend is expected to continue.
Last week, the US central bank hiked its interest rate by 75 basis points. The Federal Reserve or Fed, as it is commonly known, has now raised borrowing costs by 225 basis points since March.
Beginning in June, the number of unemployment claims exceeded 230,000, reaching an eight-month high of 261,000 in mid-July, according to the Labor Department.
Unemployment claims, however, are still below the 270,000–300,000 line, which experts believe would indicate a downturn in the labour market.
US gross domestic product (GDP) contracted 1.3 percent in the first half of 2022, meeting the standard definition of a recession. But last week, the Biden administration disputed that notion, pointing to a historically tight labour market.
The two consecutive quarterly decreases in US GDP have been mostly attributed to wild fluctuations in inventories and the trade deficit linked to a congested global supply network caused by the coronavirus pandemic.
The Department of Labor said last week that there were 10.7 million job openings at the end of June. That means there are about two job openings for every unemployed worker.
Layoffs still remain low despite several big companies such as Apple and Amazon announcing plans to slow hiring.
On Wednesday, retail giant Walmart was the latest business to say it was cutting hundreds of jobs. The news comes just a week after Walmart slashed its growth forecast, blaming rising prices for food and gas for forcing shoppers to cut back on items such as clothing that carry higher profit margins.