Weekly Jobless Claims Jump To 260,000: What You Need To Know

The U.S. labor market continues to show signs of softening after 260,000 people filed applications for unemployment insurance, keeping initial jobless claims near the highest levels since the end of last year. 

What Happened: Jobless claims jumped 6,000 for the week ended July 30 to 260,000 from a downwardly revised level of 254,000 in the prior week, according to data the Labor Department released on Thursday.

The four-week moving average was 254,750, representing an increase of 6,000 from the prior week's revised average after the average was revised down by 500 from 249,250 to 248,750. 

Why It Matters: The headline number was in line with average economist estimates, but shows the labor market is still headed in the wrong direction. New unemployment filings fell below 170,000 at the end of March before beginning to trend higher as the economy slowed.

The Federal Reserve is paying close attention to the jobs market, as the central bank aims to cool the hottest inflation numbers in more than 40 years. The Fed hiked interest rates by 75 basis points for the second consecutive month last week, bringing its target fed funds rate up to a range of 2.25% to 2.5%.

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As part of a congressionally mandated semiannual report on monetary policy, Fed chair Jerome Powell testified on inflation in front of the Senate Banking Committee in June.

"Over coming months, we will be looking for compelling evidence that inflation is moving down, consistent with inflation returning to 2%," Powell said. "We anticipate that ongoing rate increases will be appropriate. The pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy."

Photo: Tumisu from Pixabay.