The number of Americans filing for unemployment benefits increased to 197,000 in the week ending July 25, a rise of 9,000 from the previous week, according to a report from the Labor Department. Despite this uptick, layoffs are remaining in a historically low range observed over the past few years.
Weekly jobless claims are widely seen as a real-time indicator of the U.S. job market's health. The prior week's figure was revised upward to 188,000, which had been the lowest in over 50 years. Analysts surveyed by FactSet had predicted approximately 207,000 new applications for the recent week.
The four-week moving average of jobless claims, designed to smooth out weekly fluctuations, fell by 5,000 to 202,750. For the week ending July 18, the total number of Americans filing for unemployment benefits was 1.78 million, a decrease of 7,000 from the week prior.
Recent economic data presents a mixed picture. The U.S. economy grew at a slower-than-expected 1.5% pace in the second quarter. Furthermore, the Federal Reserve's preferred inflation metric, the PCE price index, stood at 3.7%, still significantly above the Fed's 2% target. Officials have indicated a willingness to raise interest rates if inflation persists, which could increase business costs and potentially curb hiring.
Earlier in July, the government reported that employers added only 57,000 jobs in June, a substantial decrease from the previous month. This moderation in hiring suggests companies are exercising caution. The unemployment rate for June fell to 4.2% from 4.3% in May, partly due to a decline in the number of individuals actively seeking employment.
This recent slowdown in hiring follows a period of stronger job gains in the preceding three months. Jobless claims have generally stabilized between 200,000 and 250,000 since the economy recovered from the pandemic recession. However, hiring had begun to decelerate approximately two years ago, with further tapering attributed to factors including tariffs, reductions in the federal workforce, and the effects of high interest rates aimed at controlling inflation.
Several major companies, including Verizon, UPS, Amazon, Disney, Starbucks, Walmart, and Microsoft, have announced workforce reductions in recent months. The persistently high price of oil, with U.S. crude trading around $83.36 a barrel and gasoline prices averaging over $4 a gallon, is also impacting businesses, particularly those heavily reliant on fuel, and consumer budgets. Analysts suggest that prolonged periods of elevated energy costs and ongoing geopolitical instability could eventually pressure companies to reduce staffing levels.