Why is 'Unemployment Rate' the Term of the Day?

Federal Reserve Bank of St. Louis

Later this week, the Labor Department is scheduled to release its latest nonfarm payrolls report on Friday, tracking job growth in July. In conjunction with the headline payroll figure, the report will include the rate of unemployment, measuring the percentage of the labor force that is unemployed and actively seeking work.

Consensus estimates call for the unemployment rate to remain unchanged at 3.6% for the fifth consecutive month. Currently, the national unemployment rate is a mere 0.1 percentage points above the pre-pandemic level of 3.5%, and near an over-five-decade low. The labor market has remained a rare bright spot amid a slowing economy, with job growth remaining robust over recent months and defying the slowdown seen in other sectors of the economy. The low unemployment rate is a key sign of the labor market’s enduring strength.

However, there may be signs that the current slowdown has finally begun to impact the labor market. Initial jobless claims, measuring the number of individuals filing for unemployment benefits on a given week, have been on an uptrend since early April. Jobless claims for the week ending July 23 totalled 256,000, compared to the pandemic-era low of 166,000 for the week ending March 19. These numbers indicate that layoffs have gradually risen over recent months, a trend that could be reflected in upcoming unemployment figures.

-Mack