In a recent report released on Thursday, the Labor Department disclosed that initial claims for U.S. unemployment benefits dropped significantly more than anticipated for the week ending July 6.
According to the report, initial jobless claims decreased to 222,000—a reduction of 17,000 from the previous week's adjusted figure of 239,000. Economists had forecast jobless claims to slightly decline to 236,000 from the initially reported 238,000 for the previous week.
"Initial claims for unemployment insurance benefits were lower than expected in the week ended July 6, aided by a favorable seasonal adjustment factor during the week that included the July 4th holiday," commented Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. She noted, "Seasonal variations will introduce noise into the data for the upcoming three weeks, complicating the interpretation of the statistics."
The Labor Department also reported that the less volatile four-week moving average fell to 233,500, a reduction of 5,250 from the prior week's revised average of 238,750.
Additionally, the number of continuing claims, which indicates individuals still receiving unemployment benefits, edged down by 4,000 to 1.852 million for the week ending June 29. Conversely, the four-week moving average of continuing claims rose by 9,750 to 1.840 million, marking its highest level since early December 2021.
A separate Labor Department report from last Friday highlighted that U.S. employment surged more than expected in June. However, the report also revealed an unexpected rise in the unemployment rate.
Non-farm payroll employment increased by 206,000 jobs in June, surpassing economists’ predictions of around 190,000 jobs. This growth was bolstered by continued robust hiring in the healthcare and social assistance sectors, alongside a notable rise in government jobs. However, the report indicated declines in temporary help services as well as slight reductions in retail and manufacturing employment.
Additionally, the Labor Department revised downward the employment gains for April and May to 108,000 jobs and 218,000 jobs, respectively, resulting in a net downward revision of 111,000 jobs.
The unemployment rate climbed for the third consecutive month, rising to 4.1 percent in June from 4.0 percent in May—defying economists' projections that it would remain stable. This unexpected increase brought the unemployment rate to its highest point since matching the rate in November 2021.
