US initial jobless claims hold near three-month low

Initial jobless claims in the U.S. edged higher by 1,000 to 218,000 in the final week of July, modestly above the prior week's revised figure but still well below market expectations of 224,000.

The reading kept claims near a three-month low and underscored continued strength in the labor market, even amid signs of cooling in hiring momentum. The figure reflects a labor market that remains tight by historical standards, suggesting that employers are holding onto workers despite uncertainties surrounding future economic growth and interest rate policy.

Meanwhile, continuing claims—or the number of people receiving benefits after an initial week of aid—were flat at 1,946,000. This marks no change from the previous week's revised total and represents a slight retreat from the recent 2021-highs of over 1,960,000 seen last month.

The steadiness in continuing claims reinforces the view that displaced workers are still finding opportunities to re-enter the labor force relatively quickly, despite a slight slowdown in job creation.

A notable data point came from filings by federal government employees, which have garnered increased attention in recent weeks. Initial claims from this group dropped by 67 to 722, after reaching a four-month high the previous week.

The decline follows closely on the heels of administrative reshuffling and dismissals at the Department of Government Efficiency (DOGE), which had led to a short-term spike in claims. While the number remains elevated relative to the past quarter, the recent dip suggests the impact of those terminations may be stabilizing.

Taken together, the data continues to paint a picture of a resilient labor market, even as certain segments—particularly within the public sector—undergo structural adjustments. The persistence of low initial claims, along with a plateau in continuing claims, could provide the Federal Reserve with further reason to maintain a cautious stance on rate policy, as it balances inflation risks with the ongoing health of the labor economy.