US labor market resilient; productivity rebounds in second quarter
By Lucia Mutikani
WASHINGTON (Reuters) — The number of Americans filing new claims for unemployment benefits rose slightly last week, while layoffs dropped to an 11-month low in July as labor market conditions remain tight.
The labor market has largely weathered 525 basis points in interest rate hikes from the Federal Reserve since March 2022, and likely delivered another month of strong employment gains in July. Despite labor market tightness, the inflation outlook continues to improve.
Other data from the Labor Department on Thursday showed a marked slowdown in labor costs in the second quarter, thanks to a sharp rebound in worker productivity. That added to reports last month showing a significant moderation in annual inflation in June as well as wage growth in the second quarter.
These reports are fanning optimism that the economy could avoid a recession. Most economists believe the U.S. central bank will probably not raise rates again this cycle.
«Recession risk is receding,» said Bill Adams, chief economist at Comerica (NYSE:CMA) Bank in Dallas.
Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 227,000 for the week ended July 29, the Labor Department said. The increase was in line with economists' expectations. Claims are in the lower end of their 194,000-265,000 range for this year, in part benefiting from difficulties adjusting the data for seasonal patterns.
Automakers typically idle plants in July to retool for new models. But these temporary closures do not always happen around the same time, which could throw off the model the government uses to strip out seasonal fluctuations from the data.
Unadjusted claims dropped 8,485 to 205,012 last week amid sharp declines in
Read more on investing.com
