New applications for unemployment benefits ticked higher last week, evidence that the historically tight labor market is starting to loosen amid record-high inflation.
MKM Partners chief economist and market strategist Michael Darda reacts to millions of Americans quitting their jobs in June on 'Making Money.'edged higher last week, hovering near the highest level of the year — the latest sign that the historically tight labor market is starting to cool off.
Figures released Thursday by the Labor Department show that applications for the week ended July 30 rose to 260,000 from the downwardly revised 254,000 recorded a week earlier. That is above the 2019 pre-pandemic average of 218,000 claims and just narrowly missed topping the eight-month high of 261,000 recorded in mid-July.
Continuing claims, or the number of Americans who are consecutively receiving unemployment aid, rose slightly to 1.416 million for the week ended July 23, up by 48,000 from the previous week's revised level. One year ago, nearly 12.96 million Americans were receiving unemployment benefits. For months, the labor market has been one of the few bright spots in the economy, with the June jobs report showing that the unemployment rate remained at 3.6% — near a historic low — for the fourth consecutive month. However, there are signs that the labor market is starting to weaken, with a plethora of companies, including Alphabet's Google, Walmart, Apple, Meta and Microsoft, announcing hiring freezes or layoffs in recent weeks.
"Initial unemployment claims rose again during the latest week in an upward trajectory with no quick end in sight," said Robert Frick, corporate economist at Navy Federal Credit Union. "Major corporations, including the country’s biggest employer, Walmart, are announcing layoffs as the economy cools."
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