Jobs Market Is Cooling Faster Than Expected

U.S. jobless claims just hit a major warning sign. Initial claims jumped to 249,000 last week—way above the 236,000 economists were expecting. That’s a 14,000 jump from the previous week and marks the highest level since August 2023.

Here’s what’s happening:

The Numbers Don’t Lie:

• Initial claims: 249,000 (vs. expected 236,000)
• Four-week moving average: 238,000 (creeping up)
• Continuing claims: 1.877 million—highest since November 2021
• Continuing claims average: 1.857 million—highest since December 2021

The trend is clear: more people are getting laid off, and those already out of work are staying that way longer.

What This Means: Layoff activity is picking up. While the Fed said yesterday it needs “more confidence” on inflation before cutting rates, Chair Powell stressed he doesn’t want to see the labor market weaken. The contradiction? It already is.

Oxford Economics expects the first rate cut in September, betting that this jobs data signals enough cooling to justify easing.

What’s Next: Friday’s employment report is the real test. The market’s pricing in 175,000 new jobs for July (down from June’s 206,000), with unemployment holding at 4.1%. If those numbers come in weaker, all bets are off.

Bottom line: The labor market is softening, and the Fed is caught between inflation and employment. September’s shaping up to be a pivotal month.