Initial jobless claims rose to their highest level since mid-November last week, the latest sign that a historically tight labor market is slowing down, according to Labor Department data released Thursday.
251,000 claims were filed for the week ended July 16, up 7,000 from the week before and above the 240,000 estimate from Dow Jones.
As a result, filings for unemployment insurance reached their highest level since Nov. 13, 2021 and provided another sign of a jobs market on fire in 2021 slowing down this year.
Continuing claims, which are reported a week behind the headline number, reached 1.384 million, the highest total since April 23.
Also Thursday, the jobs picture showed some weakness.
In the Philadelphia Fed manufacturing index, which fell to -12.3, a 9-point drop from a month ago and a significantly worse level than the 1.6 Dow Jones estimate. The percentage difference between companies reporting expansion in activity and companies experiencing contraction is represented by this number.
The employment index was 19.4, which was also a 9-point decline. Even though the reading indicates continued hiring expansion, it is also the lowest since May 2021 and indicates a slowdown in hiring. In this month’s average workweek reading, the number fell for the fourth consecutive month, indicating declining productivity.
The survey showed that companies have increased wages and compensation over the past three months, with 78.6% reporting that they have not cut.
A survey also revealed high inflation pressures, but a cooling trend. The prices paid and prices received indexes have both declined from a month ago, but both remain high. Their respective readings are 52.2 and 30.3, respectively.
Uncertainty runs high about the economic direction, as indicated by the data.
Over the first half of the year, nonfarm payroll gains have averaged 457,000 a month. However, the rate of increase has slowed down recently, with an average of 375,000 in the last three months.
Other data suggests the U.S. could be in the midst of a recession, with two consecutive quarters of negative growth. According to the Atlanta Federal Reserve, the nation’s gross domestic product dropped 1.6% in the first quarter.
Next week, the Fed is expected to raise interest rates another 0.75 percentage points, bringing the benchmark overnight rate to 2.25%-2.5%. The Fed is trying to slow down the economy that has produced the highest inflation rate since 1981.