Is the labor market further softening? The number of initial jobless claims in the United States exceeds expectations again!

Last week, the number of initial jobless claims in the United States exceeded expectations, marking the latest sign of cooling in the labor market. The latest data released by the U.S. Department of Labor shows that for the week ending July 13th, the number of initial jobless claims reached 243,000 people, higher than the previous week's 222,000 people and also above economists' expectations of 229,000 people. This data is consistent with the weekly initial jobless claims since June, reaching the highest level since August 2023. At the same time, the continuing claims reached the highest level since November 2021, with nearly 1.87 million people filing for unemployment benefits for the week ending July 6th, higher than the previous week's 1.85 million people. Thomas Simons, an economist at Jefferies, believes that part of the reason for the increase in initial jobless claims last week may be due to workers being displaced by hurricanes. This time of year typically sees significant weekly fluctuations in the number of unemployment benefit applications, including holidays like Independence Day and schools closing for summer vacation. However, Simons pointed out that the recent trends in the past few weeks may indicate more cracks appearing in the labor market. In a research report on Thursday, Simons wrote, "The data over the past few weeks have consistently indicated a gradual weakening of the labor market, although it remains strong. It is currently unclear whether this is another step towards a better balance in the labor market or an indication that it is entering the early stages of a downward trend." Many economists believe that the signs of weakness mentioned by Simons provide a reason for the Fed to cut interest rates as soon as possible. Goldman Sachs chief economist Hazous wrote in a research report on Monday that given the slowdown in inflation and recent loosening in the labor market, the Fed should consider cutting rates as early as July. In June, the U.S. unemployment rate rose to 4.1%, higher than May's 4%. Hazous wrote: "Although layoffs remain limited, the unemployment rate is gradually rising as recruitment efforts are not sufficient to absorb all new domestic and foreign labor. The rise in the unemployment rate is currently welcomed by Fed officials. We agree with Fed Chairman Powell's assessment that the labor market has now fully rebalanced. We may now be approaching a turning point, at which further declines in labor demand will lead to a larger, more unwelcome increase in the unemployment rate." As of Thursday, the market expects a 98% probability of a rate cut by the Fed at the end of the September meeting. Meanwhile, according to the CME Group's FedWatch tool, investors see less than a 5% chance of a rate cut at the Fed's next meeting on July 30th to 31st