The number of Americans filing new claims for unemployment benefits rose slightly last week, while layoffs fell to an 11-month low in July as labor market conditions remained tight.
Initial claims for state jobless benefits rose by 6,000 to a seasonally adjusted 227,000 for the week ended July 29, the Labor Department reported on Thursday. Economists polled by Reuters had forecast 227,000 claims for the latest week.
Jobless claims were at the low end of the 194,000-265,000 range for the year, partly due to the difficulty of adjusting the data for seasonal patterns.
Car manufacturers usually stop production in July to realign for new models. But these temporary shutdowns don't always happen at the same time, which can disrupt the model the government uses to remove increases from the data.
However, the overall labor market remains strong as employers retain workers after struggling to find workers during the COVID-19 pandemic. Despite mass layoffs in the technology and financial sectors, small businesses are still increasing the number of employees after being marginalized by large enterprises that are recruiting workers.
The strength of the labor market and subsiding inflation raised optimism that the economy could avoid a possible recession.
The number of people receiving benefits after the initial week of aid, which is an indicator of job hiring, rose by 21,000 to 1.700 million during the week ending July 22, the claims report showed. These known continuing claims are still low by standards, indicating that some of the laid-off workers are experiencing short periods of unemployment.
The Labor Department reported on Tuesday that there were 1.6 job vacancies for every unemployed person in June, little changed from May. The claims data has no bearing on the July jobs report, which is scheduled to be released on Friday.
The NFP data reading likely rose by 200,000 jobs in July after rising by 209,000 in June, according to a Reuters poll of economists. The unemployment rate is forecast to remain unchanged at 3.6% in July.
Although a survey from the Institute for Supply Management this week showed a measure of employment in the manufacturing sector fell to a three-year low in July, other data supported strong job gains in other months. The ADP jobs report on Wednesday showed private employment was strong last month and the Conference Board's consumer confidence survey showed households were optimistic about the labor market.
This was reinforced by a separate report on Thursday from global placement firm Challenger, Gray & Christmas that showed US-based employers announced 23,697 job cuts in July, the lowest number since August 2022. Layoffs were down 42% from June.
