U.S. employers are still hanging on to their workers. Weekly initial jobless claims fell to 187,000 in the week ending July 18, a drop of 22,000 from the prior week and one of the lowest readings in decades. The number keeps layoffs at historically low levels and will serve as an early hint of what to expect in July’s broader employment report.
The Labor Department released the figures Thursday, and analysts polled by FactSet had been expecting roughly 215,000 new applications, according to The Associated Press. That surprise underscored just how limited layoffs remain even as other parts of the economy show some strain.
Four-week trend and continuing claims
The four-week moving average, the go-to way to smooth out weekly noise, fell by about 7,250 to 207,500, Reuters reports. Reuters also notes that continuing claims, a proxy for people still receiving unemployment benefits, held at roughly 1.796 million for the week ending July 11, another historically low tally that suggests workers who do lose jobs are not staying sidelined for long.
What the numbers mean for the labor market
All of this lands against a backdrop in which the unemployment rate unexpectedly slipped to 4.2% in June, a move driven in part by a slightly smaller labor force rather than a burst of hiring, according to The Associated Press. Economists say the low level of claims points to limited furloughs and layoffs, but they caution that this does not automatically translate into a faster hiring pace.
Why markets and policy makers are paying attention
Because this weekly claims report covers the reference week for July’s official jobs data, investors and Federal Reserve officials are treating it as an early read on labor market momentum. Reuters notes the Fed is widely expected to hold interest rates at its next meeting while staying alert to signs that tight labor conditions could keep inflation pressures alive. A job market that remains too strong for too long could make the Fed’s balancing act of cooling inflation without triggering a downturn that much trickier.
Bottom line for readers
Regional outlets including The Baltimore Sun amplified the national numbers Thursday. The big takeaway: the U.S. job market is still unusually resilient, which could keep hiring competitive and jobseekers in a relatively strong position even as other economic signals start to cool.
