Initial jobless claims in US increase by most since early May

Initial applications for U.S. unemployment benefits rose last week by the most since early May and continuing claims jumped, adding to evidence of a softening labor market.

Initial claims increased by 20,000 to 243,000 in the week ended July 13, matching the highest level since August 2023, according to Labor Department data released Thursday. The median forecast in a Bloomberg survey of economists called for 229,000 applications.

Continuing claims, a proxy for the number of people receiving unemployment benefits, also rose by 20,000 to 1.87 million in the week ended July 6, the highest since November 2021.

The claims data are prone to big weekly swings this time of year, which include holidays such as Independence Day as well as school closures for summer break.

Other reports show employers have tempered the pace of hiring and the U.S. unemployment rate rose to 4.1% last month, the highest since 2021. The slowdown in the job market along with recent moderation in inflation bolsters the case for the Federal Reserve to cut interest rates in coming months.

The four-week moving average, which helps smooth short-term fluctuations in weekly initial claims figures, edged up to 234,750.

Initial claims, before adjustment for seasonal influences, climbed by 36,824 to 279,032, the highest since January. Texas and California were the states with the largest increases. Applications also picked up in Georgia, Pennsylvania, Missouri and New York.

In the 20 years that preceded the COVID-19 pandemic, weekly initial applications averaged about 345,000, and continuing claims roughly 2.9 million.