US weekly jobless claims edge up; planned layoffs decline in July

• Planned job cuts by U.S. employers fell to the lowest level since July 2024, down 46% year-over-year, with layoffs concentrated primarily in the technology sector due to AI-related restructuring
• Nonfarm payrolls are expected to increase by 80,000 jobs in July with unemployment holding steady at 4.2%, though job growth has slowed after accelerating in the spring
• The Federal Reserve held its benchmark rate at 3.50%-3.75% with three dissenting members preferring a quarter-point hike, as the stable labor market shifts focus to inflation from the six-month Middle East conflict

Summary: US Weekly Jobless Claims Edge Up; Planned Layoffs Decline in July

Key Employment Data:

• Initial jobless claims rose slightly by 1,000 to 199,000 for the week ended August 1, below the Reuters consensus forecast of 202,000
• Continuing claims increased 24,000 to 1.801 million for the week ended July 25
• Planned layoffs dropped 27% to 33,429 in July, marking a two-year low and falling 46% year-over-year

Market Implications:

The stable labor market provides the Federal Reserve flexibility to prioritize addressing inflation stemming from the six-month Middle East conflict involving the U.S. and Israel. The Fed held its benchmark rate at 3.50%-3.75% last week, though three committee members dissented in favor of a quarter-point hike.

Employment Outlook:

• July nonfarm payrolls expected to increase by 80,000 jobs (versus 57,000 in June)
• Unemployment rate forecast to hold steady at 4.2%, though Conference Board data suggests potential upside risk
• Job growth has decelerated following spring acceleration

Sector Focus:

Layoffs remain concentrated in technology, driven by artificial intelligence implementation reshaping organizations. An ISM survey showed services sector employment contracted in July, with some businesses citing workforce reductions linked to AI adoption.

Announced Hiring Plans:

Companies announced plans to hire 16,095 workers in July (up 47% month-over-month but from a low base), bringing year-to-date hiring announcements to 107,500, up 25% versus the same 2025 period.

The data suggests resilience in the labor market despite geopolitical pressures and technological disruption.