U.S. Labour Market Starts To Cool As Weekly Jobless Claims Rise, Layoffs Surge

• The number of Americans filing new claims for unemployment benefits unexpectedly rose last week and there are growing signs that demand for labour is cooling, with layoffs surging to a 16-month high in June as the Federal Reserve's aggressive monetary policy tightening stokes recession fears. 
• But the weekly jobless claims data from the Labour Department on Thursday was likely distorted by Monday's Independence Day holiday, which resulted in several states, including California, submitting estimates. Nevertheless, the labor market is losing momentum. 
• "This is what the Fed wants, but it needs to be orderly to avoid an increase in recession risks," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. 
• Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 235,000 for the week ended July 2, the highest level since January. Economists say claims need to rise above 250,000 on a sustained basis to raise concerns about the labour market's health. 
• Claims could become even more volatile in the weeks ahead. Automobile manufacturers typically close assembly plants for annual retooling after the Independence Day holiday, which is anticipated by the seasonal factors, the model that the government uses to strip out seasonal fluctuations from the data. However a global semiconductor shortage has forced manufacturers to adjust their schedules.

(Source: Reuters)