The number of Americans filing for unemployment benefits unexpectedly fell to a two-month low last week, indicating that employers are still retaining workers in a historically tight labor market.
According to Labor Department figures released Thursday, applications for the week ending Aug. 27 fell to 232,000 from a downwardly revised 237,000 the previous week. This is still higher than the pre-pandemic average of 218,000 claims in 2019.
Continuing claims, or the number of Americans receiving unemployment benefits for the second time in a row, increased by 26,000 from the previous week’s revised level to 1.438 million. Nearly 12.18 million Americans were receiving unemployment benefits a year ago.
For months, the labor market has been one of the few bright spots in the economy, with the July jobs report showing that the unemployment rate fell to 3.5% for the first time since the COVID-19 pandemic began.
FED RATE HIKES WILL NOT STOP INFLATION IF GOVERNMENT SPENDING CONTINUES TO BE HIGH, SAYS PAPER.
The government reported earlier this week that job openings had surpassed 11.2 million, implying that there are roughly two available jobs for every worker. However, data from payroll processing firm ADP released on Wednesday indicated that hiring slowed in August, with private companies adding just 132,000 new jobs, the fewest since May.
Other signs that the labor market is weakening include the recent announcements of hiring freezes or layoffs by a slew of companies, including Alphabet’s Google, Walmart, Apple, Meta, and Microsoft.
IN ANOTHER HISTORIC MOVE TO TACKLE INFLATION, THE FED RAISES INTEREST RATES BY 75 BASIS POINTS.
The data comes ahead of the August jobs report, which is expected to show that employers hired 300,000 workers in August, following a gain of 528,000 in July. The unemployment rate is expected to remain at 3.5%, its lowest level since the pandemic began two years ago.
The Federal Reserve is keeping a close eye on the labor market as it attempts to slow economic growth and keep inflation under control without triggering a recession.
Despite signs that the economy is slowing, policymakers have indicated over the last week that they remain laser-focused on combating inflation.
Cleveland Fed President Loretta Mester said on Wednesday that she expects the benchmark rate to rise above 4% this year and stay there for some time until prices return to the central bank’s 2% target.