The numbers: The number of Americans who applied for unemployment benefits last week fell by 20,000 to an eight-month low of 201,000, reflecting the reluctance of businesses to lay off workers in an era of acute labor shortages.
New jobless claims declined from a revised 221,000 in the prior week, the government said.
Claims still show a very low number of job losses. Unemployment claims typically rise when the economy weakens and a recession approaches, but there’s no sign of that.
Economists had forecast new claims in the week ended Sept. 16 to total 225,000.
Key details: The Labor Day holiday may have accounted for part of the decline in claims. Some people tend to delay filing their applications around a holiday.
Yet the number of raw or actual claims — that is, before seasonal adjustments — totaled about 175,000 for the second week in a row. That’s the lowest level since October 2022 and near the pandemic-era low.
New jobless claims rose in 31 of the 53 states and territories that report these figures to the federal government, though most of the increases were small. Claims fell in 22 states.
The number of people collecting unemployment benefits in the U.S., meanwhile, fell by 21,000 to 1.66 million. That’s also the lowest level since January.
The available evidence suggests laid-off workers are finding new jobs quickly.
Big picture: Rising interest rates orchestrated by the Federal Reserve to tame high inflation were supposed to slow the economy and raise unemployment. Higher borrowing costs usually spur consumers and businesses to spend less.
It hasn’t happened. Businesses are still hiring, layoffs are near record lows and the unemployment rate is just 3.8%. The Fed also appears primed to stop raising interest rates, giving the economy more breathing space.
Looking ahead: “While the pace of new hiring has moderated significantly in recent months, layoffs are still at rock bottom levels,” said chief economist Stephen Stanley of Santander Capital Markets. “While a single week’s claims data rarely move the big-picture needle, these figures are certainly indicative of a still-tight labor market.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
fell in Thursday trades. Bond yields
BX:TMUBMUSD10Y
also rose.
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