Applications for U.S. unemployment insurance fell for the first time in four weeks but held near the highest level since November, indicating continued moderation in the labor market.
Initial unemployment claims decreased by 5,000 to 256,000 in the week ended July 23, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for 250,000 applications.
Continuing claims for state benefits fell to 1.36 million in the week ended July 16.
Jobless claims have generally been rising in recent months and are hovering near the highest since November, coinciding with an increase in job cuts and hiring freezes at high-profile companies in sectors including technology and housing.
Further weakening in what remains a tight labor market is probably on the horizon after the Federal Reserve pressed on with one of the largest interest-rate hiking cycles in a generation on Wednesday to help cool the economy and tame decades-high inflation.
Still, Chair Jerome Powell said the labor market remains “extremely tight,” referencing a near-record number of job openings and historically low unemployment.
In recent weeks, tech companies including Spotify Inc. and Alphabet Inc.’s Google have said they’ll slow hiring in a time of global economic uncertainty. Firms in other industries like crypto, housing and autos have also said they’re letting workers go.
The monthly jobs report from the government, scheduled for next week, is forecast to show another solid month of hiring in July, with the unemployment rate holding near a 50-year low.
The jobless claims four-week moving average, a measure which smooths out some of the volatility in the series, ticked up to 249,250. It’s risen in 15 of the last 16 weeks.
On an unadjusted basis, initial claims decreased to 216,500 last week, the first drop since May. Some states that posted outsize gains in recent weeks, like Massachusetts, New York and South Carolina, reversed some of those increases last week.
A separate report Thursday showed that the U.S. economy shrank for a second straight quarter, raising chances of a recession, as decades-high inflation undercut consumer spending and the Fed’s interest-rate hikes stymied business investment and housing demand.
