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Walgreens’ finances are in trouble — but all hope is not lost

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Walgreens' finances are in trouble — but all hope is not lost

What’s going on at Walgreens?

If you’re someone who’s been following the healthcare stock market over the past few years, there’s a good chance you’ve asked yourself this question. The Illinois-based pharmaceutical giant’s stock price decreased by 80% over the past five years — currently trading at around $11 per share, compared with around $56 in July 2019.

The company’s trademark red cursive “W” is becoming less and less ubiquitous on street corners across the country, too. During a earnings call On June 27, Walgreens CEO Tim Wentworth revealed plans to close a quarter of the company’s 8,600 U.S. stores by 2027.

In the three months ended May 31, the company’s revenue rose to $36.4 billion, up 2.6% from the same quarter last year. The company also reported net income of $344 million, up from $118 million during the same period in 2023. Walgreens’ revenue and profitability numbers may be better than they were a year ago, but there are strong headwinds in the U.S. pharmacy world.

The company’s near-term guidance doesn’t inspire much confidence — during an earnings call two weeks ago, the company further reduced its adjusted earnings per share to between $2.80 and $2.95 per share.

The company declined to provide answers to MedCity News’ questions about why the company’s stock price has fallen so dramatically and how it plans to recover, referring all comments to its earnings call two weeks ago.

Experts across the healthcare industry agree that while Walgreens is currently in a bleak financial situation, a recovery is still possible. For that to happen, the company will have to let go of its retail clinic dreams and focus more on making its core pharmacy business as efficient as possible. That journey appears to have already begun, given that Walgreens announced earlier this year that it will close 160 of its VillageMD primary care clinics.

Here’s how Stephanie Davis, senior equity research analyst at Barclayssummarized his opinion on the Walgreens situation.

“Looking ahead, while we think management is taking the right strategic steps in the U.S. healthcare sector (we believe VillageMD represents the largest drag margin in [Walgreens’] assets), we see a continued challenging macro backdrop and profitability headwinds in US retail pharmacies that are likely to cloud execution, supporting our [underweight or sell] assessment [on the stock],” she wrote in her equity research report following Walgreens’ recent quarterly earnings call.

Business issues in the front and back of the store

Walgreens is struggling with both front- and back-of-store issues, said Peter Axe, CEO of Walgreens. UpScript Healtha company that fills prescriptions online through telehealth visits.

“At the front of the store, theft has forced them to place products behind locked plastic covers, which requires calling an employee to open the lid for the customer. Staffing shortages and poor quality workmanship have made this an impossible business model — especially when there are companies like Amazon with readily available inventory that can deliver within a day, and sometimes within hours,” Axe explained.

He noted that the storefront is also being affected by supply chain issues and a high level of cost consciousness among consumers — two issues that have persisted since the pandemic.

In the back of the store, Walgreens is struggling with shrinking margins. Axe believes that’s attributable to pressure from lower-priced generics offered by companies like Mark Cuban’s Cost Plus Drugs, as well as the growing use of pharmacy discount cards like those offered by GoodRx.

He suggested that slow revenue growth will hurt Walgreens’ ability to invest in new technologies that could differentiate it from its competitors. Axe noted that there is a growing demand for pharmacists to act as care coordinators, meaning they have to spend a lot of time answering patients’ questions and giving health advice instead of filling prescriptions, thus hurting revenue.

“We graduate approximately 14,000 pharmacists annually, and the current demand is likely several times that number,” he said. “Dispensing pharmacies need to invest in innovative technologies and automation, but that requires capital. The current cost of capital will impact Walgreens’ ability to invest, reinvent and reconfigure stores.”

Have our retail healthcare dreams been dashed?

In 2021 and 2022, there was a good deal of excitement about how retail health clinics could increase access to care and create value in terms of better downstream outcomes and cost savings. That fundamental opportunity still remains, but execution has proven challenging, noted Rebecca Springer, lead private equity analyst at Presentation book.

“Building new primary care clinics is an extremely capital-intensive way to scale care delivery — that has always been the case, for all participants and not just retailers, but markets have become less forgiving,” she said.

Additionally, the benefits some envisioned for locating primary care in retail spaces haven’t materialized quickly enough, Springer pointed out. These include using pharmacists as part of the primary care team, engaging patients who otherwise weren’t engaged with the health care system, and utilizing consumer data to shape population health and care management strategy, she explained.

Walgreens isn’t the only one struggling to maintain its retail health efforts — Amazon threw in the towel in its hybrid primary and urgent care business for nearly two years, and CVS Health started to close dozens of its pharmacies in Target stores this year. Just two months ago, Walmart announced plans to to close all of its 51 primary care clinics, as well as its virtual care business.

Springer said she has her eye on Oak Street Health and One Medical, which she called “the last primary health care facilities standing.”

A leader in the traditional healthcare provider sector — John Couris, CEO of Tampa General Hospital — highlighted another important reason why retailers are struggling in the care delivery area.

“Healthcare providers benefit from deep discounts and other wholesale benefits due to high patient volume — retailers are unable to take advantage of this and therefore struggle to find profitability in this space,” Couris said.

He also noted that care coordination at retail clinics is often poor.

Let’s say a patient sees a retail healthcare provider in-clinic or via telemedicine, and then learns they need specialized care. The patient still has to find a doctor in a health system to provide that care, and when they do, their records often don’t follow them to their new provider’s EHR, Couris explained.

Basically, retail clinics don’t have much incentive to share data, so they often don’t. In Couris’ view, the retail aspect of the healthcare model perpetuates a major problem in the healthcare world: episodic, poorly connected care.

Will things start to improve with a new leader in charge?

To help your business recover, Walgreens welcome Wentworth as its new CEO in October, following the match of its former leader, Rosalind Brewer.

In his first seven months on the job, Wentworth appears to be focused on reshaping the cost structure of Walgreens’ business, said Keonhee Kim, a healthcare equity analyst at Morning Star.

This is evidenced by the fact that the company cut its dividend by nearly half in January, as well as its recent announcement that it will close 25% of all U.S. stores by 2027, Kim noted.

“I believe that managing costs and focusing on key profitable markets is a good strategy, but the near future of [Walgreens] remains uncertain,” he said.

Another healthcare leader — Hal Andrews, CEO of a market research firm Trilliant Health — noted that Wentworth appears to have concluded that Walgreens needs to return to its pharmacy and retail roots. He thinks it’s a good thing that Walgreens is withdrawing from the primary care space while simultaneously expanding its specialty pharmacy presence through its Shields Pharmacy Solutions subsidiary.

During the earnings call in late June, Wentworth said Walgreens’ financial recovery will be driven by “disciplined cost management at VillageMD, coupled with strength at Shields.”

The company announced a move to strengthen its core pharmacy business in April, detailing plans to deepen its specialty pharmacy offerings to include cell and gene therapy services.

“The phrase ‘everything is on the table’ that Wentworth used on the earnings call is how a CEO describes a review of anything and everything his predecessors have done, and Wentworth is clearly questioning the strategy of his recent predecessors — with the exception of the Shields acquisition,” Andrews said.

Can Walgreens Recover?

For Andrews, Walgreens is too big to fail.

He believes the company’s biggest hurdle to optimizing its retail portfolio will be protests from local officials and residents in communities affected by the upcoming store closures. Andrews is confident Wentworth can overcome these challenges, given his track record of successful leadership at Express Scripts and Evernorth.

Andrews noted that Wentworth’s most telling comment during the earnings call was, “Pharmacy is actually the value-based healthcare provider in the ecosystem, frankly, if you really look at the cost of outcomes and the work we can do to impact those outcomes.”

In other words, pharmaceutical interventions have immense value to patients, often more than the hands-on care provided by health systems, he explained. Take obesity treatment as an example — in the emerging battle between hands-on care and pharmaceutical innovations, Ozempic and Mounjaro are positively impacting people’s lives more than bariatric surgery, Andrews said.

UpScriptHealth’s Axe also has faith that Walgreens will bounce back. How quickly the company can turn things around depends on how aggressive Wentworth and the rest of his leadership team decide to be in the coming months when it comes to cutting costs and shifting focus, he said.

“The problem CEOs create when companies are failing is that they don’t act boldly enough. Walgreens’ recent investor call would lead you to believe that they know they are at a critical juncture and need to make drastic changes. We will soon know whether or not they will make those changes,” Ax said.

Wentworth has the respect of the investment community, which should give it enough flexibility to enact a multi-quarter corporate restructuring plan, Axe said. In his view, that plan should initially focus on investing in automation and other infrastructure technologies to support pharmacy care, as well as partnering with digital health companies to increase prescription volume.

This plan also needs to focus on closing underperforming stores and repurposing stores with expensive rents, Axe added.

“The leases on many Walgreens stores may make them too expensive to close, so [Wentworth] should consider turning some retail locations into automated distribution centers, acting as “closed-door pharmacies,” he said.

Axe noted that Wentworth has “an excellent track record of quickly understanding problems and reinventing a path to success,” saying he “wouldn’t bet against” Walgreens’ new CEO.

If Wentworth Walgreens’ reinvention is successful, Wall Street could reward the stock.

Photo credit: Joe Raedle, Getty Images

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Modiv Industrial to release Q2 2024 financial results on August 6

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Business Wire

RENO, Nev., August 1, 2024–(BUSINESS THREAD)–Modiv Industrial, Inc. (“Modiv” or the “Company”) (NYSE:MDV), the only public REIT focused exclusively on the acquisition of industrial real estate properties, today announced that it will release second quarter 2024 financial results for the quarter ended June 30, 2024 before the market opens on Tuesday, August 6, 2024. Management will host a conference call the same day at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time) to discuss the results.

Live conference call: 1-877-407-0789 or 1-201-689-8562 at 7:30 a.m. Pacific Time Tuesday, August 6.

Internet broadcast: To listen to the webcast, live or archived, use this link https://callme.viavid.com/viavid/?callme=true&passcode=13740174&h=true&info=company&r=true&B=6 or visit the investor relations page of the Modiv website at www.modiv.com.

About Modiv Industrial

Modiv Industrial, Inc. is an internally managed REIT focused on single-tenant net-leased industrial manufacturing real estate. The company actively acquires critical industrial manufacturing properties with long-term leases to tenants that fuel the national economy and strengthen the nation’s supply chains. For more information, visit: www.modiv.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731628803/en/

Contacts

Investor Inquiries:
management@modiv.com

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Volta Finance Limited – Director/PDMR Shareholding

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Volta Finance Limited - Director/PDMR Shareholding

Volta Finance Limited

Volta Finance Limited

Volta Finance Limited (VTA/VTAS)

Notification of transactions by directors, persons exercising managerial functions
responsibilities and people closely associated with them

NOT FOR DISCLOSURE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, IN THE UNITED STATES

*****
Guernsey, 1 August 2024

Pursuant to announcements made on 5 April 2019 and 26 June 2020 relating to changes to the payment of directors’ fees, Volta Finance Limited (the “Company” or “Volta”) purchased 3,380 no par value ordinary shares of the Company (“Ordinary Shares”) at an average price of €5.2 per share.

Each director receives 30% of his or her director’s fee for any year in the form of shares, which he or she is required to hold for a period of not less than one year from the respective date of issue.

The shares will be issued to the Directors, who for the purposes of Regulation (EU) No 596/2014 on Market Abuse (“March“) are “people who exercise managerial responsibilities” (a “PDMR“).

  • Dagmar Kershaw, Chairman and MDMR for purposes of MAR, has acquired an additional 1,040 Common Shares in the Company. Following the settlement of this transaction, Ms. Kershaw will have an interest in 12,838 Common Shares, representing 0.03% of the Company’s issued shares;

  • Stephen Le Page, a Director and a PDMR for MAR purposes, has acquired an additional 728 Ordinary Shares in the Company. Following the settlement of this transaction, Mr. Le Page will have an interest in 50,562 Ordinary Shares, representing 0.14% of the issued shares of the Company;

  • Yedau Ogoundele, Director and a PDMR for the purposes of MAR has acquired an additional 728 Ordinary Shares in the Company. Following the settlement of this transaction, Ms. Ogoundele will have an interest in 6,862 Ordinary Shares, representing 0.02% of the issued shares of the Company; and

  • Joanne Peacegood, Director and PDMR for MAR purposes has acquired an additional 884 Ordinary Shares in the Company. Following the settlement of this transaction, Ms. Peacegood will have an interest in 3,505 Ordinary Shares, representing 0.01% of the issued shares of the Company;

The notifications below, made in accordance with the requirements of the MAR, provide further details in relation to the above transactions:

a) Dagmar Kershaw
PRESIDENT AND DIRECTOR

b) Stephen LePage
DIRECTOR

c) Yedau Ogoundele
DIRECTOR

e) Joanne Pazgood
DIRECTOR

a. Position/status

Director

b. Initial Notification/Amendment

Initial notification

  • Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor

a name

Volta Finance Limited

b. LAW

2138004N6QDNAZ2V3W80

a. Description of the financial instrument, type of instrument

Ordinary actions

b. Identification code

GG00B1GHHH78

c. Nature of the transaction

Acquisition and Allocation of Common Shares in Relation to Partial Payment of Directors’ Fees for the Quarter Ended July 31, 2024

d. Price(s)

€5.2 per share

e. Volume(s)

Total: 3380

f. Transaction date

August 1, 2024

g. Location of transaction

At the Market – London

The)
Dagmar Kershaw
President and Director

B)
Steve LePage
Director

w)
Yedau Ogoundele Director

It is)
Joanne Pazgood
Director

Aggregate Volume:
1,040

Price:
€5.2 per share

Aggregate Volume:
728

Price:
€5.2 per share

Aggregate Volume:
728

Price:
€5.2 per share

Aggregate Volume:
884

Price:
€5.2 per share

CONTACTS

For the investment manager
AXA Investment Managers Paris
Francois Touati
francois.touati@axa-im.com
+33 (0) 1 44 45 80 22

Olivier Pons
Olivier.pons@axa-im.com
+33 (0) 1 44 45 87 30

Company Secretary and Administrator
BNP Paribas SA, Guernsey branch
guernsey.bp2s.volta.cosec@bnpparibas.com
+44 (0) 1481 750 853

Corporate Broker
Cavendish Securities plc
Andre Worn Out
Daniel Balabanoff
+44 (0) 20 7397 8900

*****
ABOUT VOLTA FINANCE LIMITED

Volta Finance Limited is incorporated in Guernsey under the Companies (Guernsey) Law, 2008 (as amended) and listed on Euronext Amsterdam and the Main Market of the London Stock Exchange for listed securities. Volta’s home member state for the purposes of the EU Transparency Directive is the Netherlands. As such, Volta is subject to the regulation and supervision of the AFM, which is the regulator of the financial markets in the Netherlands.

Volta’s investment objectives are to preserve its capital throughout the credit cycle and to provide a stable income stream to its shareholders through dividends that it expects to distribute quarterly. The company currently seeks to achieve its investment objectives by seeking exposure predominantly to CLOs and similar asset classes. A more diversified investment strategy in structured finance assets may be pursued opportunistically. The company has appointed AXA Investment Managers Paris, an investment management firm with a division specializing in structured credit, to manage the investment portfolio of all of its assets.

*****

ABOUT AXA INVESTMENT MANAGERS
AXA Investment Managers (AXA IM) is a multi-specialist asset management firm within the AXA Group, a global leader in financial protection and wealth management. AXA IM is one of the largest European-based asset managers with 2,700 professionals and €844 billion in assets under management at the end of December 2023.

*****

This press release is issued by AXA Investment Managers Paris (“AXA IM”) in its capacity as alternative investment fund manager (within the meaning of Directive 2011/61/EU, the “AIFM Directive”) of Volta Finance Limited (“Volta Finance”), the portfolio of which is managed by AXA IM.

This press release is for information only and does not constitute an invitation or inducement to purchase shares of Volta Finance. Its circulation may be prohibited in certain jurisdictions and no recipient may circulate copies of this document in violation of such limitations or restrictions. This document is not an offer to sell the securities referred to herein in the United States or to persons who are “U.S. persons” for purposes of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or otherwise in circumstances where such an offering would be restricted by applicable law. Such securities may not be sold in the United States absent registration or an exemption from registration under the Securities Act. Volta Finance does not intend to register any part of the offering of such securities in the United States or to conduct a public offering of such securities in the United States.

*****

This communication is being distributed to, and is directed only at, (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies and other persons to whom it may lawfully be communicated falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The securities referred to herein are available only to, and any invitation, offer or agreement to subscribe for, purchase or otherwise acquire such securities will be made only to, relevant persons. Any person who is not a relevant person should not act on or rely on this document or any of its contents. Past performance should not be relied upon as a guide to future performance.

*****
This press release contains statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes”, “anticipates”, “expects”, “intends”, “is/are expected”, “may”, “will” or “should”. They include statements about the level of the dividend, the current market environment and its impact on the long-term return on Volta Finance’s investments. By their nature, forward-looking statements involve risks and uncertainties and readers are cautioned that such forward-looking statements are not guarantees of future performance. Actual results, portfolio composition and performance of Volta Finance may differ materially from the impression created by the forward-looking statements. AXA IM undertakes no obligation to publicly update or revise forward-looking statements.

Any target information is based on certain assumptions as to future events that may not materialize. Due to the uncertainty surrounding these future events, targets are not intended to be and should not be considered to be profits or earnings or any other type of forecast. There can be no assurance that any of these targets will be achieved. Furthermore, no assurance can be given that the investment objective will be achieved.

Figures provided which relate to past months or years and past performance cannot be considered as a guide to future performance or construed as a reliable indicator as to future performance. Throughout this review, the citation of specific trades or strategies is intended to illustrate some of Volta Finance’s investment methodologies and philosophies as implemented by AXA IM. The historical success or AXA IM’s belief in the future success of any such trade or strategy is not indicative of, and has no bearing on, future results.

The valuation of financial assets may vary significantly from the prices that AXA IM could obtain if it sought to liquidate the positions on Volta Finance’s behalf due to market conditions and the general economic environment. Such valuations do not constitute a fairness or similar opinion and should not be relied upon as such.

Publisher: AXA INVESTMENT MANAGERS PARIS, a company incorporated under the laws of France, with registered office at Tour Majunga, 6, Place de la Pyramide – 92800 Puteaux. AXA IMP is authorized by Autorité des Marchés Financiers under registration number GP92008 as an alternative investment fund manager within the meaning of the AIFM Directive.

*****

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Apple to report third-quarter earnings as Wall Street eyes China sales

Digital Finance News Staff

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Apple to report third-quarter earnings as Wall Street eyes China sales

Litter (AAPL) is set to report its fiscal third-quarter earnings after the market closes on Thursday, and unlike the rest of its tech peers, the main story won’t be about the rise of AI.

Instead, analysts and investors will be keeping a close eye on iPhone sales in China and whether Apple has managed to stem the tide of users switching to domestic rivals including Huawei.

For the quarter, analysts expect Apple to report earnings per share (EPS) of $1.35 on revenue of $84.4 billion, according to estimates compiled by Bloomberg. Apple saw EPS of $1.26 on revenue of $81.7 billion in the same period last year.

Apple shares are up about 18.6% year to date despite a rocky start to the year, thanks in part to the impact of the company’s Worldwide Developer Conference (WWDC) in May, where showed off its Apple Intelligence software.

But the big question on investors’ minds is whether iPhone sales have risen or fallen in China. Apple has struggled with slowing phone sales in the region, with the company noting an 8% decline in sales in the second quarter as local rivals including Huawei and Xiaomi gain market share.

CUPERTINO, CALIFORNIA - JUNE 10: Apple CEO Tim Cook delivers remarks at the start of the Apple Worldwide Developers Conference (WWDC) on June 10, 2024 in Cupertino, California. Apple will announce plans to incorporate artificial intelligence (AI) into Apple software and hardware. (Photo by Justin Sullivan/Getty Images)

Apple CEO Tim Cook delivers remarks at the start of the Apple Worldwide Developers Conference (WWDC). (Photo by Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images)

And while some analysts, such as JPMorgan’s Samik Chatterjee, believe sales in Greater China, which includes mainland China, Hong Kong, Singapore and Taiwan, rose in the third quarter, others, including David Vogt of UBS Global Research, say sales likely fell about 6%.

Analysts surveyed by Bloomberg say Apple will report revenue of $15.2 billion in Greater China, down 3.1% from the same quarter last year, when Apple reported revenue of $15.7 billion in China. Overall iPhone sales are expected to reach $38.9 billion, down 1.8% year over year from the $39.6 billion Apple saw in the third quarter of 2023.

But Apple is expected to make up for those declines in other areas, including Services and iPad sales. Services revenue is expected to reach $23.9 billion in the quarter, up from $21.2 billion in the third quarter of 2023, while iPad sales are expected to reach $6.6 billion, up from the $5.7 billion the segment brought in in the same period last year. Those iPad sales projections come after Apple launched its latest iPad models this year, including a new iPad Pro lineup powered by the company’s M4 chip.

Mac revenue is also expected to grow modestly in the quarter, versus a 7.3% decline last year. Sales of wearables, which include the Apple Watch and AirPods, however, are expected to decline 5.9% year over year.

In addition to Apple’s revenue numbers, analysts and investors will be listening closely for any commentary on the company’s software launches. Apple Intelligence beta for developers earlier this week.

The story continues

The software, which is powered by Apple’s generative AI technology, is expected to arrive on iPhones, iPads and Macs later this fall, though according to Bloomberg’s Marc GurmanIt won’t arrive alongside the new iPhone in September. Instead, it’s expected to arrive on Apple devices sometime in October.

Analysts are divided on the potential impact of Apple Intelligence on iPhone sales next year, with some saying the software will kick off a new iPhone sales supercycle and others offering more pessimistic expectations about the technology’s effect on Apple’s profits.

It’s important to note that Apple Intelligence is only compatible with the iPhone 15 Pro and newer phones, ensuring that all users desperate to get their hands on the tech will have to upgrade to a newer, more powerful phone as soon as it is available.

Either way, if Apple wants to make Apple Intelligence a success, it will need to ensure it has the features that will make customers excited to take advantage of the offering.

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Number of Americans filing for unemployment benefits hits highest level in a year

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Number of Americans filing for unemployment benefits hits highest level in a year

The number of Americans filing for unemployment benefits hit its highest level in a year last week, even as the job market remains surprisingly healthy in an era of high interest rates.

Jobless claims for the week ending July 27 rose 14,000 to 249,000 from 235,000 the previous week, the Labor Department said Thursday. It’s the highest number since the first week of August last year and the 10th straight week that claims have been above 220,000. Before that period, claims had remained below that level in all but three weeks this year.

Weekly jobless claims are widely considered representative of layoffs, and while they have been slightly higher in recent months, they remain at historically healthy levels.

Strong consumer demand and a resilient labor market helped avert a recession that many economists predicted during the Federal Reserve’s prolonged wave of rate hikes that began in March 2022.

As inflation continues to declinethe Fed’s goal of a soft landing — reducing inflation without causing a recession and mass layoffs — appears to be within reach.

On Wednesday, the Fed left your reference rate aloneBut officials have strongly suggested a cut could come in September if the data stays on its recent trajectory. And recent labor market data suggests some weakening.

The unemployment rate rose to 4.1% in June, despite the fact that American employers added 206,000 jobs. U.S. job openings also fell slightly last month. Add that to the rise in layoffs, and the Fed could be poised to cut interest rates next month, as most analysts expect.

The four-week average of claims, which smooths out some of the weekly ups and downs, rose by 2,500 to 238,000.

The total number of Americans receiving unemployment benefits in the week of July 20 jumped by 33,000 to 1.88 million. The four-week average for continuing claims rose to 1,857,000, the highest since December 2021.

Continuing claims have been rising in recent months, suggesting that some Americans receiving unemployment benefits are finding it harder to get jobs.

There have been job cuts across a range of sectors this year, from agricultural manufacturing Deerefor media such as CNNIt is in another place.

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