Market participants already convinced of a September rate cut from the Fed were handed more evidence on Thursday, when US jobless claims jumped and unit labor costs undershot in the first estimate for Q2.

Initial claims rose 14,000 to an above-consensus 249,000, the highest in nearly a year. Economists expected 237,000 from the initial filers print.

Although the week-to-week readings are volatile, the trend’s unmistakable: Claims are moving higher. They’re not going to revisit the lows this cycle.

The four-week average stands at 238,000, the second-highest level of 2024.

As a quick aside: Some of the increase was apparently a seasonal phenomenon related to auto plant maintenance.

More germane for the policy narrative, continuing claims topped expectations again at 1.877 million for the week to July 20. The WoW increase on that series was the largest since late January.

Ongoing claims have increased in 11 of the past 13 weeks.

The data should be — and will be — contextualized by the new FOMC statement language which emphasized that the Committee’s no longer operating on a de facto single-mandate.

“While there wasn’t anything within [the jobless claims] data that should directly influence the market’s expectations for [July’s] NFP print, when combined with ADP and the Fed’s renewed emphasis on its dual mandate, there is unquestionably a growing sense of apprehension on the employment front,” BMO’s Ian Lyngen remarked.

Meanwhile, unit labor costs rose just 0.9% in Q2, according to the preliminary estimate from the BLS, also released on Thursday. That was well below the 1.7% increase consensus expected and a meaningful slowdown from Q1.

As was the case with ECI on Wednesday, the below-consensus read on ULC was another piece of evidence to suggest the succession of a warm reads on key US macro metrics during Q1 were a bump in the proverbial road, not indicative of a structural re-acceleration in price, cost and wage pressures.

Given the undershoot on ULC, you can surmise that productivity printed ahead of estimates. The 2.3% increase for Q2 represented a marked acceleration from Q1 and topped the 1.8% collective projection from economists.

Do note from the chart: The 12-month increase in unit labor costs, just 0.5%, was the smallest of the post-pandemic era.