Unemployment Claims Rise for 2nd Straight Week as Labor Market Cools

The number of workers filing new applications for unemployment benefits rose for the second straight week as a fresh data point to a cooling U.S. labor market.

According to the Department of Labor, initial jobless claims increased by 7,000 to 226,000 for the week ending on Aug. 2, from the previous week’s upwardly adjusted 219,000.

The weekly claims figure, released on Aug. 7, came in higher than economists’ expectations of 221,000.

The four-week average, which strips out week-to-week volatility, dipped to 220,750 from 221,250.

Initial claims filed in a program for federal workers also fell by 14, to 708 in the week ending on July 26, the department reported.

Continuing jobless claims—a measure of those currently receiving unemployment benefits—increased to a higher-than-expected 1.97 million from 1.93 million. It was the 11th consecutive week that recurring claims remained above 1.9 million, hovering at their highest levels since November 2021.

Economic observers suggest that this metric may indicate that it is becoming increasingly difficult to find employment in a cooling labor market.

This comes as many full-time workers are exploring the job market in the coming year.

According to Bankrate’s recent Worker Intentions Survey, 48 percent of workers say they plan to search for a new job within the next 12 months.

At the same time, the survey found, more than one-quarter (27 percent) fear that their job security has deteriorated since January.

“While nearly half of workers say they’re likely to search for a new job over the next year, slowing hiring momentum suggests a sizeable share of those individuals may struggle to achieve their objective,” Mark Hamrick, senior economic analyst at Bankrate, said in a statement to The Epoch Times.

“At issue is whether the unemployment rate remains relatively stable if payroll growth remains constrained.”

Last month, the unemployment rate ticked up to 4.2 percent from 4.1 percent in June.

Bureau of Labor Statistics in Spotlight

In July, the U.S. economy added 73,000 new jobs, a smaller-than-expected number, according to the Bureau of Labor Statistics (BLS).

The jobs report also revealed downward revisions totaling a combined 258,000 for May and June. This was the largest two-month revision since 1979, prompting criticism about the bureau’s methodology and internal practices.

President Donald Trump promptly fired BLS Commissioner Erika McEntarfer, suggesting that political motivations may have influenced the numbers.

However, recent changes in the U.S. labor market could be the culprit, rather than a political conspiracy, said Rick Pederson, vice chairman and chief strategy officer at Bow River Capital.

“I suspect that recent reductions in immigration flows to the US labor force are causing headaches for BLS tabulations, just as conditions around Covid did,” Pederson said in a note emailed to The Epoch Times.

The appointment of a new agency head is unlikely to change entrenched counting practices or eliminate occasional unfavorable reports swiftly, he said.

Looking ahead, employment conditions will likely soften in the coming months “under the weight of tariff policy,” RBC economists said.

Still, although the unemployment rate is expected to climb by the year’s end, “structural challenges that weigh on the labor force participation rate will keep the unemployment rate low by historical standards,” they wrote in an Aug. 1 note.

Despite the sizable revisions, other components of the July jobs report have been consistent with companies’ personnel freezes this year.

The number of permanent job losers was flat, signaling a lack of layoffs in the current climate. The number of unemployed new entrants increased, highlighting employers’ reluctance to hire people.

Labor Productivity

Labor productivity improved in the second quarter, new Bureau of Labor Statistics data show.

Nonfarm productivity advanced by 2.4 percent in the April–June period, an improvement from the 1.8 percent decline in the first three months of 2025.

Market watchers had penciled in a 2 percent gain.

Underneath the hood, the report revealed a 3.7 percent jump in output and a 1.3 percent boost in hours worked.

Unit labor costs eased to a slightly higher-than-expected 1.6 percent in the second quarter, down from an upwardly revised 6.9 percent in the first quarter.