US Unemployment Claims Rise but Layoffs Remain Low Amid Elevated Inflation

The number of Americans applying for unemployment benefits rose last week but layoffs remain in a historically healthy range. According to the Labor Department, U.S. filings for jobless aid in the week ending August 1 increased by 1,000 to 199,000. This is up from the previous week's revised figure of 198,000.

The weekly filings for unemployment benefits are considered a close-to-real-time indicator of the health of the U.S. job market. The Federal Reserve's preferred inflation metric, PCE, came in at 3.7% for June, still above the central bank's 2% target. If inflation remains elevated, Fed officials say they're ready to raise interest rates to combat higher prices.

Recently, the government reported that employers pulled back on hiring in June, adding only 57,000 jobs. This is less than half of the previous month's total and a sign that companies remain cautious about adding to their headcounts. The unemployment rate dropped to 4.2% from 4.3% in May, but this decline is mostly due to many out-of-work people giving up looking for jobs.

Among the companies that have trimmed their workforce recently are Verizon, UPS, Amazon, Disney, Starbucks, Walmart, and Microsoft. The Labor Department's report also showed that the four-week moving average of weekly jobless claims fell by 4,500 to 198,750.