In the week ending July 13th, the number of initial jobless claims in the United States reached the highest level since August 2023. In the product structure, the operating income of products worth 10-30 billion yuan was 401/1288/60 million yuan, respectively. Analysts believe that the data clearly points to a cooling labor market, providing further reasons for the Fed to start cutting interest rates soon. Texas was most affected by Hurricane Beryl, with the largest increase in the number of initial unemployment claims last week.
In the past week, the number of initial claims for unemployment benefits in the United States reached the highest level since August 2023, and the number of continuous claims for unemployment benefits continued to rise significantly, which further proves that the labor market is weakening.
Data released by the US Department of Labor on Thursday showed that the number of initial claims for unemployment benefits increased by 0.02 million to 0.243 million in the week ending July 13, while the median economist forecast was 0.229 million. The increase in the number of claims was the largest since early May, and the number of claims was the highest since August 2023. In addition to Texas, California also saw a significant increase in the number of claims, and there were also increases in Georgia, Pennsylvania, Missouri and New York.
From the data of various states, the number of initial claims for unemployment benefits in Texas increased by more than 0.0115 million people, the largest increase since March 2021. This growth reflects the impact of Hurricane Beryl, which has caused some workers to be displaced.
In addition to Texas, the number of claims in California also increased significantly, and there were also increases in Georgia, Pennsylvania, Missouri, and New York.
In addition, in the week ending July 6th, the number of continuous claims for unemployment benefits also increased by 0.02 million to 1.87 million, the highest level since November 2021.
Investment bank views
At this time each year, initial claims for unemployment benefits fluctuate greatly each week, and factors affecting them include data adjustments before and after holidays such as Independence Day, severe weather, and auto manufacturers usually shutting down assembly plants and restarting production of new models from July 4. All of these factors may exacerbate labor market volatility.
Excluding seasonal factors, other data points to a slowdown in US employers' recruitment pace, with the country's unemployment rate rising to 4.1% last month, the highest level since 2021.
Nancy Vanden Houten, chief US economist at Oxford Economics, said, "Stepping back from the 'noise' of various data, initial jobless claims have indeed been on the rise since the beginning of the year. , We believe that so far, this growth is consistent with a cooling labor market, and the characteristic of the labor market is that the pace of recruitment is slow."
Analyst Stuart Paul pointed out," The steady rise in continuous claims for unemployment benefits and the upward trend in initial claims for unemployment benefits indicate that the labor market is cooling. We expect the unemployment rate to rise in the second half of 2024 and reach 4.5% by the end of this year."
More economists believe that signs of weakness in the job market and recent easing of inflation provide reasons for the Federal Reserve to cut interest rates in the coming months.
Chris Larki, director and general manager of E-Trade Trading and Investment, believes that "The Federal Reserve has asked for more evidence of economic cooling. To a large extent, they have obtained it. They can add today's weekly initial jobless claims to the list of data that is favorable for interest rate cuts."
On Monday, July 15th, Jan Hatzius, an economist at Goldman Sachs, quoted last month's US unemployment rate data in a research report, stating, "The unemployment rate is gradually increasing because the recruitment pace is not enough to absorb new domestic labor combined with foreign labor...Given the recent looseness in the labor market, the Fed should consider raising interest rates as early as July."
In addition, the Fed's "Beige Book" report on Wednesday, July 17th, pointed out that from the end of May to the beginning of July, the number of employed people has increased slightly, but the number of manufacturing employees has declined. The report stated that enterprises in several regions hope to be more selective in hiring personnel, rather than filling all vacant positions.
Jeffrey Roach, chief economist at LPL Financial, said," From the recent Beige Book, we learned that companies are not actively filling vacant positions as they did in the previous months. Perhaps we should expect policy makers in the labor market to take more cautious attitudes."
Editor/ping