U.S. Jobless Claims Hit Highest Level Since 2021
Nonfarm business sector productivity rose 2.4% between April and June, after falling 1.8% in Q1, according to the BLS.
Quick overview
- Jobless claims in the U.S. rose to 226,000 last week, the highest level in a month, indicating weakening job creation.
- Continuing claims also increased by 38,000, reaching 1.97 million, the highest since November 2021.
- Despite the rise in claims, the unemployment rate remained stable at 4.2%, suggesting employers have not yet implemented mass layoffs.
- In contrast, labor productivity rebounded by 2.4% in Q2, offsetting earlier surges in labor costs.
Jobless claims in the U.S. rose more than expected last week, although the unemployment rate remained stable. Meanwhile, productivity posted a better-than-expected rebound in the second quarter.
Initial unemployment claims climbed to their highest level in a month, suggesting that job creation is weakening and laid-off workers are taking longer to find new employment. The data adds to mounting signs of fragility in the U.S. labor market since the onset of Donald Trump’s trade war, and it has become an increasing concern for the Federal Reserve.
The Labor Department reported Thursday that initial jobless claims totaled 226,000 last week, a rise of 7,000 from the previous reading and the highest since the week ending July 5. The figure came in above economists’ consensus estimate of 221,000.
Continuing claims—those filed by people who remain unemployed and are still receiving benefits—also rose by 38,000, the biggest weekly increase since late May. As a result, the number of people receiving unemployment assistance reached 1.97 million, the highest level since November 2021.
Cooling Labor Market
Continuing claims serve as an indirect gauge of hiring activity. If hiring were picking up, these ongoing claims would be declining—which is currently not the case. Still, the latest data suggests that while hiring has slowed, employers have not yet resorted to mass layoffs, which has helped keep the unemployment rate relatively low, at 4.2% in July.
Nevertheless, the labor market is clearly slowing. Official data released last week showed job creation in July fell well short of analysts’ expectations. Additionally, employment figures for the prior two months were revised downward by nearly 260,000 jobs—a revision that reportedly led Trump to dismiss the head of the Bureau of Labor Statistics (BLS).
Productivity Bounces Back
Also on Thursday, the BLS reported that labor productivity rebounded more strongly than expected in Q2, helping to offset the surge in labor costs seen earlier this year.
Nonfarm business sector productivity rose 2.4% between April and June, after falling 1.8% in Q1, according to the BLS.
Output per worker increased 3.7%—the sharpest gain since Q3 2023—while unit labor cost growth moderated to 1.6%, down from a revised 6.9% in the first quarter.
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