First-time claims for U.S. unemployment benefits unexpectedly dipped in the week ended July 15th, according to a report released by the Labor Department on Thursday.
The report said initial jobless claims slipped to 228,000, a decrease of 9,000 from the previous week’s unrevised level of 237,000. Economists had expected jobless claims to inch up to 242,000.
“For the last several weeks, seasonal factors have been lending a downward bias to the data, but that will shift next week,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
“Seasonal noise aside, the claims data are consistent with a labor market that may becoming less tight but is still characterized by very few layoffs,” she added. “The FOMC is still on track, in our view, to raise rates at its meeting next week.”
The Labor Department said the less volatile four-week moving average also fell to 237,500, a decrease of 9,250 from the previous week’s unrevised average of 246,750.
Meanwhile, the report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, rose by 33,000 to 1.754 million in the week ended July 8th.
The four-week moving average of continuing claims still edged down to 1,731,500, a decrease of 1,750 from the previous week’s revised average of 1,733,250.
“We expect initial and continued claims to trend higher later this year as the economy enters a recession,” said Vanden Houten. “However, the current claims data don’t provide enough evidence for the Fed to conclude that the labor market is cooling enough to forego a rate hike at next week’s FOMC meeting.”
She continued, “We expect the rate hike at the July 26 meeting to be the last for the cycle, given signs that inflation is moderating and that labor market tightness is easing, albeit gradually.”
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