The number of Americans filing new applications for unemployment benefits fell more than expected last week as distortions from the weather and temporary automobile plant closures faded.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 235,000 for the week ended July 20, the Labour Department said on Thursday (July 25). Economists polled by Reuters had forecast 238,000 claims for the latest week.
Claims had increased in the prior week to the upper end of their 194,000-245,000 range for this year, lifted by a surge in applications in Texas related to disruptions from Hurricane Beryl. Temporary automobile plant closures for retooling also contributed to the rise.
Through the volatility, layoffs remain low by historical standards and the slowdown in the labour market is mostly coming from a reduction in hiring as the Federal Reserve’s aggressive interest rate hikes in 2022 and 2023 cool demand.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, slipped 9,000 to a seasonally adjusted 1.851 million during the week ending July 13, the claims report showed.
The so-called continuing claims data covered the period during which the government surveyed households for July’s unemployment rate. Continuing claims were little changed between the June and July survey weeks.
The unemployment rate rose to a 2-1/2-year high of 4.1% in June as jobs became scarce relative to last year.
The US central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range for the past year. It has hiked its policy rate by 525 basis points since 2022 to tame inflation.
Financial markets are expecting a rate cut in September followed by additional cuts in November and December.
A separate report from the Commerce Department’s Census Bureau showed non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rebounded 1.0% in June after dropping 0.9% in May. – Reuters
