US jobless claims increase for second straight week

As more businesses – particularly in the tech industry – announce layoffs as a result of economic uncertainty, unemployment claims have increased. 

The number of US unemployment insurance applications increased for a second week and remained close to the highest level seen since November, signalling a further easing of the labour market despite the fact that circumstances are still tight as the Federal Reserve attempts to cool demand to help control inflation.

Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 262,000 for the week ending August 6, according to US Department of Labor figures released on Thursday. That still falls short of the 270,000–300,000 target, which economists believe would indicate a significant downturn in the jobs economy.

During the week ending July 30, there were 1.428 million people receiving benefits following the initial week of assistance, a rise of 8,000. The so-called continuing claims are a proxy for hiring.

As more businesses – particularly in the tech industry – announce layoffs and halt recruitment and hiring, unemployment claims have increased.

The US central bank in late July raised interest rates by 75 basis points. As the bank, the Federal Reserve, continues to increase its policy rate, demand for workers may decline, but for the time being, companies are mostly attempting to hang onto the employees they already have due to a severe labour shortage. The Fed has now hiked the US interest rate 225 basis points since March. It meets again in September.

Consumers, producers and jobs

A different study released on Thursday showed that a crucial indicator of US producer prices unexpectedly decreased in July for the first time in more than two years, mostly due to a decline in energy prices.

The producer price index (PPI) declined 0.5 percent last month, the first negative monthly reading since April 2020, the Labor Department reported. The PPI climbed 1.0 percent in June. In the 12 months through July, it surged 9.8 percent after jumping 11.3 percent in June.

Also this week, data showed a lower-than-expected increase in consumer prices. The consumer price index (CPI) increased 8.5 percent from a year earlier, cooling from the 9.1 percent June advance. The latter number was the highest inflation reading since 1981. The Labor Department reported that consumer prices were unchanged from the prior month due mainly to the drop in gasoline prices.

On the jobs creation front, the data for July released by the Labor Department on Friday showed that US firms created 528,000 jobs –  more than twice as many as anticipated. The jobless rate is currently at a 50-year low. That means there were 10.7 million job openings at the end of June and nearly two openings for every unemployed worker.