U.S. Unemployment Hits 11-Month High Amid Labor Market Softening

The number of new unemployment claims in the U.S. reached an 11-month peak, indicating a weakening labor market. The rise, partly caused by temporary automotive plant shutdowns and Hurricane Beryl, has led to an increased number of people receiving jobless benefits. Despite this, layoffs remain generally low.

The number of Americans filing new applications for unemployment benefits increased to an 11-month high last week, suggesting a softening in the labor market despite the season's typical volatility.

The Labor Department's Thursday report also indicated a mid-July surge in people on jobless rolls, reaching levels not seen since late 2021. This development fuels concerns about rapid labor market deterioration, initially flagged by a 2-1/2-year high unemployment rate of 4.1% in June. Federal Reserve Chair Jerome Powell noted that while labor market changes align with broader normalization, policymakers are closely monitoring for troubling signs.

Despite the week's jump in claims due to automotive plant shutdowns and Hurricane Beryl, layoffs remain generally low. Government data revealed the lowest layoff rate in over two years for June, with demand dampened by the central bank's recent rate hikes. Planned job cuts also declined, and productivity saw encouraging growth, suggesting firms can manage costs without compromising talent.

(With inputs from agencies.)