The recent report from the Labor Department showed a slight decrease in the number of Americans filing for unemployment benefits last week, reflecting a resilient U.S. labor market amidst high interest rates. Jobless claims dropped by 2,000 to 231,000 for the week ending on Aug. 24, slightly lower than the anticipated 232,000 new filings. The four-week average of claims also declined by 4,750 to 231,500, helping to smooth out some of the weekly fluctuations.
Although the weekly filings for unemployment benefits, which are an indicator of layoffs, remain historically low, they have seen a slight increase in recent months. Initially averaging 213,000 weekly claims from January to May, the numbers started rising in May, reaching 250,000 by late July. This rise indicates a potential cooling of the strong U.S. job market due to high interest rates.
In July, employers added just 114,000 jobs, significantly below the monthly average of nearly 218,000 from January to June. Furthermore, the unemployment rate increased for the fourth consecutive month in July but still stands relatively low at 4.3%. The Labor Department also revealed that 818,000 fewer jobs were added to the U.S. economy from April 2023 to March this year than initially reported, supporting the notion of a gradual slowdown in the job market.
The Federal Reserve, aiming to tackle inflation that reached a four-decade high over two years ago, raised its benchmark interest rate 11 times in 2022 and 2023, reaching a 23-year high. With inflation now nearing the Fed’s target of 2% and showing signs of control, many economists predict a reduction in interest rates at the Fed’s upcoming meeting in September. Currently, 1.87 million Americans are collecting jobless benefits, reflecting a minor increase of 13,000 for the week ending on Aug. 17.
