WASHINGTON: The number of Americans filing claims for unemployment benefits unexpectedly fell last week, but the decline likely overstates the health of the labour market.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 196,000 for the week ended September 12, the Labour Department said on Thursday. Economists polled by Reuters had forecast 208,000 claims for the latest week. The surprise drop likely reflected volatility around last week’s Labour Day holiday. Claims are difficult to adjust for seasonal fluctuations around moving public holidays.
The underlying trend remained consistent with a labor market that has regained its poise after wobbling through much of summer. The Federal Reserve on Wednesday raised interest rates for the first time since July 2023 and flagged further increases in borrowing costs in the months ahead. Fed Chairman Kevin Warsh singled out the labor market as “one basic sign of strength,” adding that policymakers believed “that the unemployment rate is basically running consistent with full employment.”
The Fed’s overnight benchmark interest rate was raised by a quarter of a percentage point to the 3.75percent-4.00percent range. The claims data covered the week during which the government surveyed employers for the nonfarm payrolls component of September’s employment report.
Nonfarm payrolls increased by 162,000 jobs in August after job growth slowed sharply in the prior three months. The claims report showed the number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, dropped 39,000 to a seasonally adjusted 1.730 million during the week ended September 5. Labour market stability is mostly from low layoffs.
Economists say businesses remain hesitant to boost hiring in the face of headwinds, including the US-Israeli war with Iran, which is driving up oil prices and stoking inflation.
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