Weekly claims for unemployment benefits in the United States rise, but the job market remains tight

  • Weekly claims for unemployment benefits increase from 6,000 to 260,000
  • Continuing receivables rose from 48,000 to 1,416 million
  • The trade deficit is reduced by 6.2% to 79.6 billion dollars in June

WASHINGTON, Aug 4 (Reuters) – The number of Americans filing new jobless claims increased last week, suggesting some weakening in the labor market, although general conditions remain tight.

This was underlined by other data on Thursday showing a sharp drop in layoffs announced by US-based companies in July. The still low level of jobless claims and the sustained pace of support hires indicate that the economy is not in recession despite gross domestic product contracting in the first half of the year.

“The risk is that demands will continue to rise as labor market conditions slowly cool, but we do not expect a sharp rise from current levels at any time as demand for workers will continue to outstrip supply,” said Lydia Boussour. , chief economist of the United States at Oxford Economics in New York.

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Initial applications for state unemployment benefits increased by 6,000 to seasonally adjusted 260,000 for the week ending July 30, the Labor Department said. Economists interviewed by Reuters had forecast 259,000 questions for the past week.

Part of the recent increase in claims could be the result of difficulties in adjusting data to seasonal fluctuations. Car manufacturers typically close assembly plants for annual retooling in July, resulting in temporary layoffs.

But the chip shortage may have disrupted the timing of the reorganization, potentially nullifying the model the government uses to eliminate seasonal fluctuations from the data.

Unadjusted loans fell from 9,825 to 205,587 last week. A large increase in demand in Connecticut was offset by notable decreases in Massachusetts, Kentucky and Ohio.

Seasonally adjusted credits exceeded 230,000 in early June, reaching an eight-month high of 261,000 in mid-July. However, they remain below the 270,000-300,000 range which economists believe would signal a slowdown in the labor market.

“If initial claims start to fluctuate around that level, it would be cause for concern, as it would increase the risk of employment starting to decline and the unemployment rate starting to rise,” said Ryan Sweet, senior economist at Moody’s Analytics. West Chester, Pennsylvania. “A rising unemployment rate sends a threatening recession warning.”

The number of people receiving benefits after an initial week of aid increased from 48,000 to 1,416 million during the week ending July 23. The so-called continuous requests, a proxy for hiring, were the highest in the last three months.

Shares on Wall Street have changed little. The dollar fell against a basket of currencies. US Treasury prices have risen.

BASSI LAYOFF

The economy contracted by 1.3% in the first half, meeting the definition of a recession. Wild swings in inventories and the trade deficit linked to tangled global supply chains were largely the cause of the two direct quarterly drops in gross domestic product.

Job openings at the end of June were 10.7 million, with 1.8 million for every unemployed worker.

For now, layoffs remain very low. A separate report from global relocation company Challenger, Gray & Christmas on Thursday showed that job cuts announced 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 focused on the automotive, technology and financial sectors. The shortage of semiconductors has hampered the auto industry, while layoffs in the tech and financial sector reflect cooling demand due to higher interest rates.

Last week, the Federal Reserve raised the policy rate by another three-quarters of a percentage point. The US central bank has now raised the rate by 225 basis points since March.

“Levels of job cuts are nowhere near those of the 2001 and 2008 recessions at this time, although they may be on the rise,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas. “If we are in a recession, we have yet to feel it in the job market.”

The claims data bears no relation to the July employment report, which is scheduled to be released on Friday. According to a Reuters poll of economists, non-farm wages likely increased by 250,000 jobs last month after rising by 372,000 in June.

A third Commerce Department report on Thursday showed the trade deficit fell 6.2% to $ 79.6 billion in June, when exports rose to a record high. Trade was the only positive point of the economy in the second quarter, adding 1.43 percentage points to GDP after being a drag for seven consecutive quarters.

“This provides a decent basis for net exports to continue to spur ongoing GDP growth in the third quarter,” said Andrew Hunter, an economist at Capital Economics. “But with the latest poll evidence suggesting faltering global growth and a stronger dollar will hit export demand in the coming months, that support is likely not going to be sustained.”

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Reporting by Lucia Mutikani Editing by Bill Rigby

Our Standards: Thomson Reuters Trust Principles.

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