The Blubber

The number of Americans applying for unemployment benefits surged to its highest level in a year last week, reflecting ongoing challenges amid a period of elevated interest rates.

For the week ending July 27, jobless claims increased by 14,000 to 249,000, up from 235,000 the previous week, according to the Labor Department's report on Thursday. This represents the highest level since the first week of August last year and marks the 10th consecutive week that claims have exceeded 220,000. Prior to this period, claims had been below that threshold in all but three weeks of the year.

Weekly unemployment claims are commonly seen as an indicator of layoffs. Despite being somewhat elevated over the past couple of months, they remain at historically moderate levels.

Robust consumer demand and a resilient labor market have helped stave off a recession, which many economists had anticipated during the Federal Reserve's extended series of rate hikes that began in March 2022.

The Fed's objective of achieving a "soft landing" — reducing inflation without triggering a recession or widespread layoffs — seems attainable.

On Wednesday, the Fed maintained its current interest rate but indicated that a cut could be considered in September if recent trends continue. Current labor market data show some signs of weakening.

In June, despite employers adding 206,000 jobs, the unemployment rate increased. U.S. job openings have also declined. Coupled with elevated layoffs, the Fed may be poised to lower interest rates next month, as anticipated by most analysts.

The four-week average of claims, which smooths out weekly fluctuations, rose by 2,500 to 238,000.

For the week of July 20, the total number of Americans receiving unemployment benefits increased by 33,000 to 1.88 million. The four-week average for continuing claims rose to 1,857,000, the highest since December 2021.

The rise in continuing claims suggests that some individuals receiving unemployment benefits are facing greater difficulties in finding new jobs.