WASHINGTON: The number of Americans filing new claims for unemployment benefits fell moderately last week, suggesting some loss momentum in the labor market against the backdrop of higher interest rates.
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 250,000 for the week ended Aug. 13, the Labor Department said on Thursday. Data for the prior week was revised to show 10,000 fewer applications filed than previously reported. Economists polled by Reuters had forecast 265,000 applications for the latest week.
Though claims have drifted higher in recent weeks, they remain below the 270,000-300,000 range that economists say would signal a material slowdown in the labor market.
Companies in the interest rate-sensitive housing and technology industries have been laying off workers in response to slowing demand caused by the Federal Reserve’s aggressive monetary policy tightening campaign to tame inflation.
The US central bank has raised its policy rate by 225 basis points since March.
Minutes of the July 26-27 policy meeting published on Wednesday showed that though Fed officials “observed that the labor market remained strong,” many also noted “there were some tentative signs of a softening outlook for the labor market.”
Difficulties adjusting the data for seasonal fluctuations are also likely putting upward pressure on claims.
Motor vehicle manufacturers normally shut down assembly plants for annual retooling in July, resulting in temporary layoffs. But that pattern has been disrupted by chip shortages, potentially throwing off the model the government uses to strip seasonal fluctuations from the data.
Still, demand for labor remains strong. There were 10.7 million job openings at the end of June, with 1.8 openings for every unemployed worker.
Last week’s claims data covered the period during which the government surveyed businesses for the nonfarm payrolls portion of August’s employment report. Claims fell between the July and August survey periods. The economy created 528,000 jobs in July.
Data next week on the number of people receiving benefits after an initial week of aid will shed more light on job growth prospects for August.
The so-called continuing claims, a proxy for hiring, increased 7,000 to 1.437 million in the week ending Aug. 6.