The US labor sector continues to display remarkably resilient macroeconomic performance despite a series of tariff restrictions and high borrowing costs. The official report from the US Labor Department on Thursday confirmed that initial jobless claims for the week ended July 4 fell by 2,000 to 215,000, beating the market consensus forecast of 218,000.
The stability of the weekly data was reinforced by a decline in the four-week moving average metric to 218,750. The trend demonstrates that despite giants such as Microsoft recently announcing large-scale layoffs (including the cutting of 4,800 employees at its Xbox unit), the overall rate of layoffs across the domestic economy remains at a very low level.
However, a warning sign was seen in the continuing claims component, which climbed 8,000 to 1.814 million for the week ended June 27. The news agency reported that the long-term benefit figure reflected the seasonal effects of the summer school holidays, during which some education support workers were forced to sign up for temporary assistance.
The release of the labor data, released amid the June FOMC meeting minutes (published early Thursday morning), revealed policymakers’ deep concerns about the import-led inflation chain. Fed committee members acknowledged that physical supply chain disruptions due to the Iran-Israel war have increased energy costs, but they projected the domestic labor market to remain stable in the near term with the unemployment rate hovering around the current level of 4.2%.
For Wall Street, the resilience of the labor data provides a strong “shield” for new Fed Chairman Kevin Warsh to maintain an aggressive (hawkish) monetary policy approach. Since the labor market has not shown any immediate signs of paralysis. The Fed apparently has a large safe space to keep the benchmark interest rate in the high range of 3.50% to 3.75% for an extended period to contain stubborn inflation.
