New applications for jobless benefits ticked higher during the final week of July, according to data released Thursday by the Labor Department.
In the week ending July 30, initial claims for unemployment insurance rose to 260,000, up by 6,000 from the previous week. While claims still remain near pre-pandemic lows, they’ve risen to the highest level since November as the job market slows down.
The steady rise in jobless claims comes as businesses feel the squeeze of high inflation and interest rate hikes meant to slow down price and wage growth. As the Federal Reserve hikes interest rates, businesses tend to hire fewer employees and avoid offering higher wages.
“We think initial claims are more likely to rise from current levels than decline, but we don't expect a surge in new claims. While the labor market may be getting marginally cooler, overall demand for workers continues to exceed the supply,” wrote Nancy Vanden Houten, lead US economist at Oxford Economics, in a Thursday analysis.
The U.S. has still added more than 2.5 million jobs since the start of 2022, including more than 1 million over the past three months alone. The unemployment rate was 3.6 percent in July, just 0.1 percentage points above its pre-pandemic level, and there were almost two open jobs for every unemployed American in June, according to Labor Department data.
“Given that imbalance between the supply and demand for workers, we think employers are more likely to first slow hiring rather than lay off workers as the economy slows,” Vanden Houten wrote.
Even so, some businesses in technology, real estate, retail, and other sectors hit hard by rising interest rates have been forced to lay off workers as the economy slows and their sales fall.
“Major corporations, including the country’s biggest employer, Walmart, are announcing layoffs as the economy cools. Losing a job is often traumatic, but there’s some comfort for those laid off that the jobs market is still strong and voluntary job switching for higher wages is still prevalent,” wrote Robert Frick, corporate economist at Navy Federal Credit Union, in a Thursday analysis.
Jobseekers have remained confident in their ability to find new positions for better pay and career opportunities even as consumer confidence in the economy has plunged.
Roughly 4.2 million Americans quit their jobs in June, according to Labor Department data released Tuesday. The percentage of workers who quit their jobs in June held even at 2.8 percent, just 0.1 percentage points below a record high set in April.