Last week saw a rise in the number of Americans applying for new unemployment benefits, reaching an 11-month peak, which indicates a slight weakening in the labor market. However, it's worth noting that claims often fluctuate at this time of year. According to the Labor Department, initial claims for state unemployment benefits jumped by 14,000 to a seasonally adjusted 249,000 for the week ending July 27, marking the highest figure since August of the previous year. Economists surveyed by Reuters had anticipated 236,000 claims for the latest week. Claims have been trending upwards since June, partly due to volatility from temporary shutdowns at motor vehicle plants for retooling and disruptions caused by Hurricane Beryl in Texas. Although applications have exceeded the upper limit of this year's 194,000-245,000 range, layoffs remain relatively low. Government data revealed that the layoffs rate in June was the lowest in over two years. The labor market's slowdown is attributed to low hiring, influenced by the Federal Reserve's interest rate hikes in 2022 and 2023, which have curbed demand.

A separate report from global outplacement firm Challenger, Gray & Christmas indicated that planned job cuts by US-based companies fell by 47 percent to 25,885 in July. Year-to-date, companies have announced 460,530 job cuts, a 4.4 percent decrease from the same period last year, and planned to hire 3,676 workers in July. This year, employers have announced plans to hire 73,596 workers, the lowest total since 2012. Federal Reserve Chair Jerome Powell noted on Wednesday that while the labor market changes align with a normalization process, policymakers are closely observing for signs of a more significant shift. The US central bank maintained its benchmark overnight interest rate within the 5.25 percent-5.50 percent range, set since last July, but hinted at the possibility of lowering borrowing costs as early as its next meeting in September.

The number of individuals receiving benefits after the initial week of aid, a measure of hiring, rose by 33,000 to a seasonally adjusted 1.877 million during the week ending July 20, according to the claims report. The claims data does not impact July's employment report as it falls outside the survey period. The government is projected to report on Friday that nonfarm payrolls increased by 175,000 jobs last month, following a rise of 206,000 in June. The unemployment rate is expected to remain stable at 4.1 percent, after rising for three consecutive months.