The number of continuing claims for unemployment benefits reached its highest level since November 2021 last week, warning signs The job market is cooling as the unemployed struggle to find new jobs.
New data from the Ministry of Labour The data showed that nearly 1.84 million claims were filed in the week ending June 22, up from 1.82 million the previous week. At the same time, the four-week moving average of weekly jobless claims rose by 3,000 to 236,000, the highest rate since September 2023.
LPL Financial’s chief economist, Jeffrey Roach, said the data “sends a warning signal that the labor market could be slowing.”
The key question for the Federal Reserve is whether this easing is Yet another sign of normalization in the job market or an indicator that higher interest rates could seriously harm the U.S. economy.
A growing number of economists believe that the risks are likely to result in a painful outcome.
Nancy Vanden Houten, chief U.S. economist at Oxford Economics, cautioned against interpreting jobless claims data too broadly, as they can be volatile from week to week, but noted that a further rise in the trend in weekly jobless claims would undoubtedly be a cause for concern.
“A persistent rise in initial claims would signal greater labor market weakness and a larger rise in the unemployment rate than we currently expect and strengthen our case for a Fed rate cut in September,” Vanden Houten wrote in a note Thursday.
The Fed has largely stuck to its argument that it must win “greater confidence” on the downward trajectory of inflation before cutting interest rates. During his last press conference on June 12, Fed Chairman Jerome Powell emphasized that the labor market continues to normalize and that, from the Fed’s perspective, it has not yet shown real signs of concern.
“We’re seeing a gradual cooling, a gradual shift toward a better balance. We’re watching the situation carefully for signs of something bigger, but we’re really not seeing that,” Powell said.
