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US Continuing Jobless Claims Climb to 1.801 Million, Cooling Labor Market Boosts Rate Cut Expectations

2026-08-07

Latest data shows that for the week ending July 25, 2026 (Q3 2026), US continuing jobless claims climbed to 1.801 million, an increase of 19,000 from 1.782 million in the previous week. The released figure not only exceeded the market consensus expectation of 1.790 million but also broke above the 1.8 million psychological threshold again. The upward trend in continuing claims highlights that the heat in the labor market is steadily dissipating, indicating a gradual shift in the equilibrium of labor supply and demand.

In terms of key data details and macroeconomic correlations, continuing jobless claims lag behind initial claims data but more profoundly reflect the "difficulty for the unemployed to find new jobs." Although initial jobless claims have recently remained at relatively low levels, the rise in continuing claims indicates that while most companies have not initiated large-scale layoffs, once workers lose their jobs, the time they remain unemployed is significantly lengthening. This labor hoarding phenomenon, characterized by "slow hiring and few exits," has helped alleviate the overall labor shortage.

Regarding the changes in this employment data, market institutions have provided clear attribution interpretations. Analytical institutions point out that the higher-than-expected continuing jobless claims mark a substantial cooling in the labor market, rather than just short-term seasonal fluctuations. Institutional perspectives suggest that this data breaks the single narrative of continuous economic resilience, indicating that under the prolonged heavy pressure of a high-interest-rate environment, companies' willingness to make new hires has been constrained. As slack in the labor market gradually expands, it will provide the Federal Reserve with more evaluation room for accommodative policies.

Looking ahead to the short term (1-2 months), the labor market is expected to maintain a steady cooling pace. Initial jobless claims may fluctuate with seasonal factors, but if continuing claims remain stably above 1.8 million, it will gradually weaken consumers' disposable income and expenditure expectations. In the medium term (3-6 months), if the persistently cooling employment data is combined with a disinflationary trend, it will significantly boost the probability of the Federal Reserve initiating a rate-cut cycle within the year. However, investors also need to note that if employment deteriorates faster than expected, the market focus may shift from the "bullish expectation of rate cuts" to the "risk of economic recession."

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