Continuing jobless claims have surged to their highest level in 31 months, despite a slight decline in initial jobless claims, according to the latest data from the Department of Labor.
Continuing claims, which measure the number of people receiving unemployment benefits for consecutive weeks, rose to 1.839 million for the week ending June 15. This marks an increase of 18,000 from the previous week and the highest reading since November 2021. The rise in continuing claims defied economists’ expectations, who had predicted a slight decline.
Initial Jobless Claims Decline
In contrast, initial jobless claims, which track new applications for unemployment benefits, fell to 233,000 for the week ending July 22. This is a decrease of 3,000 from the prior week and the third straight weekly drop. The decline in initial claims suggests that fewer people are losing their jobs, which could indicate a gradual stabilization in the labor market.
Labor Market Signals
The current labor market data presents a mixed picture:
- Rising Continuing Claims: The increase in continuing claims suggests that more people are experiencing prolonged unemployment, facing difficulties in finding new jobs.
- Falling Initial Claims: The decline in initial claims indicates that layoffs are decreasing, possibly reflecting employer confidence in the economic outlook.
Potential Impact on Federal Reserve Policy
The latest labor market trends could influence the Federal Reserve’s monetary policy decisions. A slowly loosening labor market might provide the Fed with the rationale to consider lowering interest rates towards the end of the year. Such a move could be particularly beneficial for mortgage rates, making home loans more affordable and potentially boosting the housing market.