Labor market shows signs of slowing down, with initial jobless claims in the United States soaring to nearly a one-year high last week, exceeding expectations

According to the latest data from the U.S. Department of Labor, the number of initial claims for unemployment benefits in the United States increased by 14,000 to 249,000 in the week ending July 27, higher than economists' expectations of 236,000 and the highest level in nearly a year. Michigan and Missouri reported significant increases.

At the same time, the number of continued claims for unemployment benefits, which reflects the number of people continuing to receive unemployment benefits, also rose to 1.88 million, the highest since November 2021. While for most of the past two years, the number of Americans applying for and receiving unemployment benefits has been close to historic lows, this trend has changed in recent months, with hiring slowing down and the labor market showing signs of returning to pre-pandemic levels.

Federal Reserve Chairman Jerome Powell acknowledged at a recent press conference that risks in the labor market are rising, noting that job growth has slowed and the unemployment rate has increased. However, he emphasized that the current unemployment rate is still low, and the data for the first half of this year does not indicate economic weakness.

To observe the trend more smoothly, the four-week moving average of initial claims for unemployment benefits increased by 2,500 to 238,000. The seasonally adjusted number of initial claims for unemployment benefits decreased by about 10,000 to 215,827, with Texas reporting the largest decline. It is worth noting that at this time of year, due to factors such as school holidays and seasonal reorganization of automobile factories, unemployment benefit application data tends to fluctuate significantly.

According to data from executive training company Challenger, Gray & Christmas Inc., although the number of layoffs remains low, U.S. employers announced 25,885 job cuts in July, a 9% increase year-on-year. Challenger's report stated that except for the manufacturing sector, the number of job cuts in most industries was lower than the same period last year. In addition, the recruitment plans announced so far this year are at the lowest level since 2012.

On the other hand, the U.S. Department of Labor also released data on non-farm productivity and labor costs for the second quarter. The report showed that labor productivity growth in the second quarter exceeded expectations, reaching 2.3%, while unit labor costs increased by 0.9%, down from 3.8% in the first quarter. This data indicates that companies are working to mitigate the impact of rising operating costs, providing further evidence of relief from inflationary pressures.

The release of this data had an immediate impact on the financial markets, with the yield on the 10-year U.S. Treasury falling to 4.016%, the lowest level since early February, and the 2-year Treasury yield also dropping to 4.235%, the lowest in six months It is worth mentioning that the US July non-farm payroll data will be released at 20:30 Beijing time on Friday. Economists expect that the upcoming July non-farm employment report will show a slowdown in job growth, with the unemployment rate forecasted to remain unchanged at 4.1%. These indicators will continue to provide important information about the US economic situation for policymakers and market participants