The Department of Labor reported an increase in first-time claims for unemployment benefits to 238,000 last week, up by 4,000 from the previous week. This rise also led to the highest four-week average of initial claims since August 2023. Additionally, continuing claims, filed by individuals who have received benefits for a week or longer, reached their highest level since November 2021.
In the monthly jobs report, Wilmington Trust’s chief economist, Luke Tilley, highlighted a concerning factor – the number of unemployed persons by reason for unemployment. He noted that on a three-month average basis, this number has increased by about 200,000 people from the previous year. This metric of permanent job losers is historically not positive in an expanding economy and suggests that the labor market may be at risk of deteriorating.
However, despite these concerns, other indicators of layoff activity do not show a significant increase. US-based employers announced fewer job cuts in June compared to May but the total number of cuts is still higher than that of last year. Challenger, Gray & Christmas reported 48,786 job cuts in June down from May but up by almost 20% compared to June of the previous year. This data suggests that while the labor market may be showing signs of normalization it is still facing challenges that could lead to further economic risks.