The number of Americans filing new applications for unemployment benefits saw a slight increase last week, indicating that layoffs remain at a relatively low level despite a slowing labor market. Initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted 230,000 for the week ending September 7, according to the Labor Department's report on Thursday. Economists surveyed by Reuters had predicted 230,000 claims for the latest week. The recent data included the Labor Day holiday, which typically causes volatility in claims around public holidays. However, claims have remained largely unchanged since dropping from an 11-month high of 250,000 in late July. The labor market's slowdown is being influenced by businesses reducing hiring as higher interest rates suppress economic demand.
Government data last week revealed that nonfarm payrolls increased less than anticipated in August, while the unemployment rate dropped to 4.2% from 4.3% in July. Against this backdrop of a slowing labor market, the Federal Reserve is expected to initiate its policy easing cycle next Wednesday, with a 25 basis points rate cut assured after the annual increase in consumer prices slowed significantly in August, although some inflation persistence remained. The central bank has kept its benchmark overnight interest rate within the current 5.25%-5.50% range for a year, following a 525 basis points increase in 2022 and 2023.
The number of people receiving benefits after an initial week of aid, a measure of hiring, rose by 5,000 to a seasonally adjusted 1.850 million during the week ending August 31, as per the claims report. The so-called continuing claims have generally trended downward through August after surging in July to levels last seen in late 2021. This decline aligns with the drop in the unemployment rate last month.
