In anticipation of the monthly jobs report, the Labor Department disclosed on Thursday that initial claims for U.S. unemployment benefits significantly exceeded expectations for the week ending July 27.
The data revealed that initial jobless claims surged to 249,000, marking a 14,000 increase from the prior week's static figure of 235,000. Economists had forecasted a slight uptick to 236,000.
This substantial rise propelled jobless claims to their highest point since reaching 258,000 in the week ending August 5, 2023.
"Jobless claims rose more than anticipated during the week ending July 27. Despite recent fluctuations driven by various special factors, the upward trend suggests a notable increase in layoff activities," commented Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
She added, "While the Federal Reserve indicated yesterday that more evidence of cooling inflation is needed before considering interest rate cuts, Fed Chair Jerome Powell also emphasized his desire to avoid significant weakening of the labor market. We predict the first rate cut will occur in September."
The report also indicated that the less volatile four-week moving average inched up to 238,000, a rise of 2,500 from the previous week's consistent average of 235,500.
Furthermore, continuing claims, reflecting the number of individuals receiving ongoing unemployment benefits, increased by 33,000 to 1.877 million for the week ending July 20, the highest level since November 2021.
The four-week moving average of continuing claims also edged up to 1,857,000, an increment of 5,250 from the preceding week's revised average, marking the highest level since December 2021.
On Friday, the Labor Department is set to release its significantly more scrutinized report on July’s employment stats. Predictions indicate an employment rise of 175,000 jobs for July, following a robust addition of 206,000 jobs in June. The unemployment rate is expected to hold steady at 4.1 percent.
