Initial jobless claims totaled lower than expected last week, contrasting with other signs of labor market weakness.
On a seasonally adjusted basis, initial jobless claims came in at 233,000 this week, down 17,000 from the previous week’s upwardly revised level and below the Dow Jones estimate of 240,000. Department of Labor stated Thursday.
The report comes as Wall Street is nervous amid signs that job growth is slowing and even pointing to a potential recession. Stock futures, which had been in negative territory earlier, turned sharply positive following the 8:30 a.m. ET release, while Treasury yields held higher.
While the top number helped ease some concerns, continuing claims, a week late, edged up to 1.875 million, the highest level since Nov. 27, 2021.
Initial jobless claims have been on an upward trend for most of this year, but remain relatively modest. The recent growth has been attributed to the devastation of Hurricane Beryl and the summer shutdown of auto plants.
The four-week average rose to 240,750, the highest in nearly a year. Initial jobless claims jumped by 14,000 last week, fueling concerns about rising layoffs.
“The pullback in claims in the latest week is further evidence that weather and seasonal auto plant shutdowns were responsible for the sharp rise in claims the week before,” said Robert Frick, corporate economist at Navy Federal Credit Union. “If you’re looking for further weakness in the labor market, you need to find it elsewhere.”
Concerns about labor market conditions escalated after Friday’s nonfarm payrolls report showed an increase of just 114,000 jobs in July. At the same time, the unemployment rate rose to 4.3%, triggering the so-called Sam’s rule, which measures recessions by measuring changes in the unemployment rate.
Markets have been highly volatile since then, with a three-day sharp sell-off that began last Thursday raising concerns that the U.S. economy is mired in deeper problems.
In turn, traders expect the Fed to begin cutting interest rates in September, with some even calling for an emergency rate cut during the meeting to combat recent weakness. Markets are pricing in a first rate cut of half a percentage point and a full percentage point cut by the end of the year, according to CME Group. Fed Watch Tracker for Fed Funds futures contracts.
About The Author
