WASHINGTON (Reuters) – The number of people filing for initial unemployment benefits in the United States rose more than expected last week, but the numbers showed no major change in the labor market, with summer holidays and temporary factory closures typically causing volatility in July.
The Labor Department said on Thursday that new claims for state unemployment insurance rose by a seasonally adjusted 20,000 to 243,000 for the week ended July 13. Economists surveyed by Reuters had expected claims to be 230,000 for the latest week.
Jobless claims fell last week, further away from the 10-month high hit in early June.
Some of the decline was due to the difficulty of adjusting data around holidays such as Independence Day, and automakers typically shut down assembly plants the week of July 4 to prepare new models.
But different manufacturers have different shutdown schedules, which could upset the models the government uses to average out seasonal fluctuations. Last year, jobless claims rose in July and early August, but then reversed completely by early September.
Ignoring the volatility, the labor market has cooled as demand slows with the Federal Reserve planning to raise interest rates in 2022 and 2023. The unemployment rate rose to a two-and-a-half-year high of 4.1% in June.
The Fed’s “Beige Book” report, released Wednesday, noted that “employment increased modestly” in early July, but manufacturing employment fell.
The paper said improved supply and “lower labor turnover have reduced the demand to find new workers,” adding that “businesses in some areas are expected to be more selective about who they hire and not fill all open positions.”
The jobless claims data covers the period when the government surveyed establishments for the nonfarm payroll portion of its July jobs report. Nonfarm payrolls rose by 206,000 in June.
Data next week on the number of people who received benefits after the first week of aid, a gauge of employment, will shed more light on the state of the labor market in July. The jobless claims report showed that so-called continuing claims rose by 20,000 in the week ended July 6, to a seasonally adjusted 1.867 million.
It is becoming more difficult for unemployed people to find new jobs compared to last year. The U.S. central bank has maintained its benchmark overnight interest rate at the current range of 5.25% to 5.50% over the past year. In order to curb inflation, it has raised the policy interest rate by 525 basis points from 2022 onwards.
Financial markets expect the September rate cut to be followed by further cuts in November and December.
(Reporting by Lucia Mutikani; Editing by Paul Simao and Andrea Ricci)
