Emre Yumlu 
Important labor market data from the United States has been released. For the week ending June 21, initial jobless claims came in at 236,000, below economists’ expectations of 244,000. The previous week’s figure was 246,000.
During the same period, continuing claims showed a notable increase. For the week ending June 14, claims rose to 1.974 million, the highest level since November 2021. Expectations were around 1.950 million.
Economic Contraction Exceeds Expectations
The U.S. economy shrank by 0.5% on an annualized basis in the first quarter of 2024. Economists had forecasted a 0.2% decline. This marks a sharp pullback compared to the 2.4% growth recorded in the last quarter of 2023.
Layoffs on the Rise, Hiring Remains Weak
Although initial jobless claims have decreased in the short term, broader data indicates an increase in layoffs. With the start of summer holidays and technical factors, non-teaching staff in some states are eligible to file for unemployment, contributing to the rise.
Economists also highlight that growing uncertainties and President Donald Trump’s import tariffs have made it difficult for companies to plan ahead, leading many firms to take a cautious approach toward hiring.
Could the Federal Reserve Cut Rates This Fall?
The Federal Reserve held interest rates steady last week, keeping the benchmark rate in the 4.25%–4.50% range. Fed Chair Jerome Powell noted that they are waiting to see more clarity on external inflation pressures before considering any rate cuts. The likelihood of a rate cut this fall appears to be increasing.
Unemployment Rate May Rise
The rise in continuing claims suggests that the unemployment rate could climb from 4.2% in May to 4.3% in June. A recent Conference Board survey showed the share of consumers who believe jobs are “plentiful” dropped to its lowest level in over four years.
Lou Crandall, Chief Economist at Wrightson ICAP, commented, “The rising volume of layoffs is likely to translate into an increase of at least one-tenth of a percent in the national jobless rate in the June employment report.”
U.S. Stock Markets Close Higher
Additionally, U.S. stock markets in positive territory. The Dow Jones rose by 0.24%, the S&P 500 by 0.38%, and the Nasdaq by 0.45%. This uptick was supported by easing tensions in the Middle East and Powell’s dovish tone on potential interest rate cuts, which sparked short-term optimism in the markets.
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