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Weekly filings for unemployment benefits are considered
representative of layoffs and are close to a real-time indicator
of the health of the U.S. job market.
Last week, the Federal Reserve’s preferred inflation metric, PCE,
came in at 3.7% for June, still well above the U.S. central
bank’s 2% target. If inflation remains elevated, Fed officials
say they are ready to raise interest rates to combat higher
prices, raising costs for businesses and making them less likely
to hire.
Last month, the government reported that employers pulled back
on hiring in June, adding only 57,000 jobs. That’s less than
half the previous month’s total and a sign that companies remain
cautious about adding to their head counts. The unemployment
rate dropped to 4.2% from 4.3% in May, though that decline is
mostly because many out-of-work people gave up looking for jobs
and were no longer counted as unemployed.
June’s tepid hiring comes after a relative surge in job gains
the previous three months, countering concerns that the conflict
in Iran could trip up an already wobbly labor market. The
government’s July jobs report is due out Friday.
Weekly jobless aid applications have stabilized in a range
mostly between 200,000 and 250,000 since the U.S. economy
emerged from the pandemic recession. However, hiring began
slowing about two years ago and tapered further in 2025 due to
President Donald Trump’s tariffs, his purge of the federal
workforce and the lingering effects of high interest rates meant
to control inflation.
Among the companies that have trimmed their workforce recently
are Verizon, UPS, Amazon, Disney, Starbucks, Walmart and
Microsoft.
The Labor Department’s report Thursday also showed that the
four-week moving average of weekly jobless claims, which
balances out some of the weekly volatility, fell by 4,500 to
198,750.
The total number of Americans filing for unemployment benefits
for the previous week ending July 25 was 1.8 million, an
increase of 24,000 from the week before.
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