- Weekly jobless claims rise by 6,000 to 260,000
- Continuing claims rise by 48,000 to 1.416 million
- Trade deficit narrows 6.2% to $79.6 billion in June
WASHINGTON, Aug 4 (Reuters) – The number of Americans filing new claims for unemployment benefits increased last week, suggesting some easing in the labor market, even as general conditions remain tight.
That was underscored by other data on Thursday showing a sharp drop in layoffs announced by U.S.-based companies in July. The still low level of jobless claims and the sustained pace of hiring support the idea that the economy is not in recession despite the contraction in gross domestic product in the first half.
“The risk is that demands will continue to climb as labor market conditions slowly cool, but we don’t expect a big increase from current levels anytime soon as demand for workers continues to outstrip supply. “said Lydia Boussour, chief US economist at Oxford Economics in New York.
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Initial claims for state unemployment benefits rose by 6,000 to a seasonally adjusted 260,000 for the week ended July 30, the Labor Department said. Economists polled by Reuters had forecast 259,000 applications for the past week.
Some of the recent increase in claims could be the result of difficulties adjusting data to seasonal fluctuations. Motor vehicle makers normally close assembly plants for annual retooling in July, leading to temporary layoffs.
But chip shortages could have disrupted the retooling schedule, potentially overturning the model the government uses to eliminate seasonal fluctuations in data.
Unadjusted claims fell from 9,825 to 205,587 last week. A sharp increase in filings in Connecticut was offset by notable declines in Massachusetts, Kentucky and Ohio.
Seasonally-adjusted claims topped 230,000 in early June, hitting an eight-month high of 261,000 in mid-July. However, they remain below the 270,000 to 300,000 range that economists say signals a slowing labor market.
“If initial claims start to hover around this level, that would be concerning, as it would increase the risk that employment would start to fall and the unemployment rate would start to rise,” said Ryan Sweet, senior economist at Moody’s Analytics. in West Chester. , Pennsylvania. “A rising unemployment rate sends an ominous warning of recession.”
The number of people receiving benefits after a first week of help rose by 48,000 to 1.416 million in the week ending July 23. So-called continuing demands, an indicator of hiring, were the highest in three months.
Stocks on Wall Street were little changed. The dollar fell against a basket of currencies. US Treasury prices rose.
The economy contracted 1.3% in the first half, meeting the definition of a recession. Sudden swings in inventories and the trade deficit tied to struggling global supply chains are largely to blame for the two consecutive quarterly declines in gross domestic product.
There were 10.7 million job openings at the end of June, with 1.8 openings for every unemployed person.
For now, layoffs remain very low. A separate report by global outplacement firm Challenger, Gray & Christmas showed on Thursday that announced job cuts by US-based companies fell 20.6% to 25,810 in July.
So far this year, employers have announced 159,021 layoffs, down 31.3% from the same period last year and the lowest January-July since 1993.
Job cuts this year have been concentrated in the automotive, technology and finance sectors. Semiconductor shortages have hampered the auto industry, while layoffs in the tech and financial sectors reflect slowing demand due to rising interest rates.
The Federal Reserve last week raised its key rate by an additional three-quarters of a percentage point. The US central bank has now raised that rate by 225 basis points since March.
“Levels of job cuts are nowhere near where they were in the 2001 and 2008 recessions right now, although they may be on the rise,” said Andrew Challenger, senior vice president. by Challenger, Gray & Christmas. “If we’re in a recession, we’re not feeling it in the job market yet.”
The claims data has no bearing on the July jobs report, which is due out on Friday. Nonfarm payrolls likely rose by 250,000 jobs last month after rising 372,000 in June, according to a Reuters survey of economists.
A third Commerce Department report released Thursday showed the trade deficit narrowed 6.2% to $79.6 billion in June as exports hit a record high. Trade was the only bright spot for the economy in the second quarter, adding 1.43 percentage points to GDP after being a drag for seven straight quarters.
“This provides a decent basis for net exports to continue to boost GDP growth in the third quarter,” said Andrew Hunter, economist at Capital Economics. “But with the latest survey data suggesting faltering global growth and the stronger dollar are set to hit export demand over the coming months, that support is unlikely to hold.”
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Reporting by Lucia Mutikani Editing by Bill Rigby
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