The number of Americans on unemployment rolls has risen for the ninth straight week, according to data released Wednesday by the Department of Labor, in the latest signal that the labor market is weakening.
The total number of Americans collecting unemployment benefits—known as continuing claims—rose to 1.86 million for the week of June 22. That’s the highest level since November 2021.
Initial jobless claims, widely seen as a proxy for layoffs, increased from 234,000 to 238,000, according to data from the Labor Department. While that’s relatively low by historical standards, initial unemployment filings have been rising steadily recently after mostly remaining below 220,000 this year.
Other data released on July 3 that bolster the view that the labor market is weakening include the Institute for Supply Management (ISM) reporting faster contraction of employment in the U.S. service sector, and payroll processor ADP reporting a lack of broad-based job growth.
“Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month,” Nela Richardson, ADP chief economist, said in a statement.
While the ADP report indicated that U.S. private employers added 150,000 jobs in June, the group noted that this figure represented the third straight month of slowing job creation numbers.
The ISM report showed that overall business activity in the U.S. service sector fell into recession territory.
“The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment,” Steve Miller, chair of the ISM’s services business survey committee, said in a statement.
“Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs,” he added.
Following Wednesday’s private-sector job growth data and jobless claims numbers, market analysts are now focused on Friday’s release of official government figures on nonfarm payrolls, a key measure of job creation.
Some strategists expect that Friday’s job growth numbers will again show signs of softening in the labor market.
JP Morgan Chase economist Michael Hanson said in a note that the bank expects a 200,000 gain in jobs in June, which would be down from 272,000 in May.
Federal Reserve Chair Jerome Powell remarked on July 2 at a panel discussion at the European Central Bank’s monetary policy conference in Sintra, Portugal, that the central bank’s high interest-rate policy has helped bring down inflation and now central bank policymakers are looking at when to cut interest rates to avoid holding them too high for too long and hurting the labor market.
“We’re well aware that if we go too soon, that we can undo the good work we’ve done,” Mr. Powell said. “If we do it too late, we could unnecessarily undermine the recovery and the expansion.”
