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First-time unemployment claims continued to creep up last week, rising to their highest level since November.
Initial jobless claims rose by 9,000 to 244,000 in the week ended July 9, coming in well above economists’ expectations of 235,000 claims, according to FactSet.
The four-week moving average was 235,750, an increase of 3,250 to the previous week’s average. The average has been gradually inching up since April, as the Federal Reserve moves to tighten monetary policy in a bid to curb inflation.
“While we think the risk is for further increases in claims as economic growth slows, we don’t anticipate a sharp rise in new claims any time soon,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
Continuing claims, or the number of people already receiving unemployment benefits, were 1.331 million for the week ended July 2, a decrease of 41,000 from the previous week. This figure was below consensus estimates for 1.355 million, suggesting that while the labor market may be loosening up, it remains fairly strong.
And indeed, the unemployment rate held steady at 3.6% in May for the fourth straight month, according to the Labor Department. The economy added 372,000 jobs in June.
The ongoing strength of the labor market likely will encourage the Fed to keep aggressively hiking rates, especially given that inflation has soared the most in four decades. The consumer price index rose at a 9.1% annual pace in June, prompting 83% of Wall Street traders to speculate that the Fed could raise interest rates by as much as 100 basis points, or 1%, at the central bank’s July 27 meeting, according to the CME FedWatch Tool.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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