Steady Job Growth Anticipated for July, Despite Extended Unemployment Periods
The number of Americans filing new unemployment benefit claims decreased last week, signaling steady job growth during July. However, some workers face prolonged periods of unemployment due to moderated hiring.
Initial state unemployment benefit claims fell by 7,000 to a seasonally adjusted 221,000 for the week ending July 12, according to the U.S. Department of Labor. Economists surveyed by Reuters had forecast 235,000 claims.
Annual Car Plant Maintenance Affecting Data
The closure of car assembly plants for annual maintenance or model updates might be influencing the data. Automakers typically halt production lines in summer, though the schedule varies, potentially skewing the government’s model for removing seasonal fluctuations.
Cautious Hiring Amid Economic and Political Uncertainty
Despite generally low layoffs, the economic uncertainty stemming from trade policy has left businesses hesitant to expand hiring.
President Donald Trump announced last week that higher tariffs on imports from countries like Mexico, Japan, Canada, Brazil, and the European Union will take effect on August 1st. In April, Trump imposed a 10% tariff on nearly all imports and gave countries 90 days to negotiate trade deals.
The Federal Reserve’s Beige Book, released on Wednesday, reported that hiring “remained generally cautious” at the start of July due to ongoing economic and political uncertainty, according to many contacts of the U.S. central bank.
The Fed noted that while layoff reports were limited across industries, they were “more common among manufacturers.” Additionally, the Fed mentioned that “many contacts expected to postpone significant hiring and layoff decisions until uncertainty decreases.”
Extended Unemployment Periods Amid Slow Hiring
The slow hiring is further emphasized by the growing number of people receiving unemployment benefits. The number of individuals receiving benefits after an initial week of assistance, an indirect measure of employment, increased by 2,000 to a seasonally adjusted 1.956 million during the week ending July 5th. The start of a new quarter may have influenced the current level of so-called continued claims.
Next Week’s Data May Provide More Clarity on July Labor Market Health
The upcoming week’s continued claims data may offer more insight into the health of the July labor market.
The unemployment rate fell to 4.1% in June after remaining at 4.2% for three consecutive months.
Key Questions and Answers
- What is the current state of jobless claims in the U.S.? Initial state unemployment benefit claims decreased by 7,000 to a seasonally adjusted 221,000 for the week ending July 12.
- Why are businesses hesitant to hire more employees? Economic and political uncertainty, primarily due to trade policy changes, has left businesses cautious about expanding their workforce.
- What factors might be influencing the unemployment claims data? Annual car plant maintenance and model updates could affect the data, as production lines are typically halted during summer.
- What is the current unemployment rate in the U.S.? The unemployment rate fell to 4.1% in June.
