Recurring applications for unemployment benefits surged to the highest since November 2021, adding to recent signs that the labour market is weakening.
Continuing claims, a proxy for the number of people receiving benefits, rose by 38,000 to 1.97 million in the week ended July 26, according to Labor Department data released Thursday.
An elevated level of recurring filings indicates unemployed workers are having more difficulty finding a new job. That said, new claims have remained largely subdued this year, a sign that businesses are mostly holding onto their workers even as they pull back on hiring.
Initial claims rose to 226,000 last week, slightly higher than economists expected. Weekly data tends to be volatile, and the four-week moving average was little changed.
Investors and economists are on high alert for any indication that the labour market is further deteriorating after the government’s July employment report showed a more significant cooldown in job creation than originally thought.
That report, which included outsized downwards revisions to May and June numbers, prompted President Donald Trump to fire the Bureau of Labor Statistics commissioner and raised expectations that the Federal Reserve would cut interest rates at their next policy meeting in September.
Job growth has slowed over the last few months as businesses have grown more cautious about staffing decisions in reaction to Trump’s economic policies and uncertainty around them, particularly tariffs.
Overall, layoffs have remained modest this year. However, some large companies have recently announced staff cuts, including Merck & Co and Intel Corp. Stanford University also plans to reduce its workforce by more than 300 people, adding to the list of schools that have announced headcount reductions due to federal funding cuts.
Before adjusting for seasonal factors, initial claims rose last week. Massachusetts and Texas saw the largest gains.
Separate data Thursday showed that US labour productivity rebounded in the second quarter along with economic growth, resuming a trend of efficiency gains that are helping keep a lid on wage-related inflationary pressures.
Source: theedgemalaysia