NEW DELHI (CoinChapter.com) — The number of Americans requesting unemployment benefits last week reached its highest level in more than eight months, indicating a worsening labor market.
According to the latest Labor Department data, claims totaled 251,000 for the week ending July 16, exceeding the Dow Jones forecast of 240,000 claims. Meanwhile, the claims came to be 7,000 higher versus the previous week.
The increase in claims for unemployment insurance led to the greatest weekly level since November 13, 2021, and it served as yet another sign that the growing job market of 2021 has started to shrink this year.
The number of continuing claims, calculated one week after the headline figure, rose to 1.384 million, the highest total since April 23. Another report released on Thursday also indicated a weakening job market.
The manufacturing index from the Philadelphia Fed dropped to a reading of –12.3, a 9-point decline from the previous week and a much worse figure than the consensus forecast of –1.6 from the Dow Jones. The figure shows the percentage difference between businesses reporting activity growth and those experiencing activity contraction.
Particularly, the employment index fell by 9 points to 19.4. Although that implies a steady increase in hiring, it is the lowest score since May 2021, which also suggests that hiring is slowing.
In addition, for the fourth consecutive month, the average workweek reading decreased to 6.4, which suggests that productivity may be dwindling.
Companies responding to the poll indicated higher salary costs, with 78.6 percent reporting increases in pay over the previous three months, while no respondents reported pay cuts. Even though the labor market is currently robust, notable companies, including Tesla, Netflix, Carvana, Redfin, and Coinbase, have announced layoffs.
Furthermore, according to data released by the Labor Department, wholesale inflation increased 11.3 percent from a year earlier in June. Although inflation pressures are still high, they are cooling down steadily. Despite being down from a month ago, the price paid and received indexes had high levels of 52.2 and 30.3, respectively.
The figures are released when economic forecasting uncertainty is at an all-time high. The economy’s biggest silver lining has been job growth, which averaged a strong 457,000 nonfarm payroll additions each month for the first half of the year.
However, with the last three months’ average growth of 375,000, such advances have slowed recently.
With two consecutive quarters of negative growth, most other statistics point to the possibility that the United States is currently experiencing a recession that meets the general criteria. For example, the Atlanta Federal Reserve estimates that the gross domestic product will drop another 1.6 percent in the second quarter after falling by 1.6 percent in the first.
Following a 0.75 percentage point increase expected next week, the benchmark overnight borrowing rate will range between 2.25 percent and 2.5 percent. The Fed is trying to reduce inflation in an economy that has seen its highest rate since 1981.
These figures show a divergent picture of the post-pandemic economy: consumers are being forced to cut down on their spending due to inflation and lackluster growth, fueling concerns that the economy may enter a recession.
