Slightly more Americans filed for unemployment benefits last week, but layoffs remain at historically low levels despite two years of elevated interest rates.
Jobless claims rose by 2,000 to 230,000 for the week of Sept. 7, the Labor Department reported Thursday. That number matches the number of new filings that economists projected.
The four-week average of claims, which smooths out some of week-to-week volatility, ticked up by 500, to 230,750.
The total number of Americans collecting jobless benefits rose by a modest 5,000, remaining in the neighborhood of 1.85 million for the week of Aug. 31.
Weekly filings for unemployment benefits, considered a proxy for layoffs, remain low by historic standards, though they are up from earlier this year.
During the first four months of 2024, claims averaged a just 213,000 a week, but they started rising in May. They hit 250,000 in late July, adding to evidence that high interest rates were finally cooling a red-hot U.S. job market.
Employers added a modest 142,000 jobs in August, up from a paltry 89,000 in July, but well below the January-June monthly average of nearly 218,000.
Last month, the Labor Department reported that the U.S. economy added 818,000 fewer jobs from April 2023 through March this year than were originally reported. The revised total supports evidence that the job market has been slowing steadily and reinforces the Fed’s plan to start cutting interest rates later this month.
The Fed, in an attempt to stifle inflation that hit a four-decade high just over two years ago, raised its benchmark interest rate 11 times in 2022 and 2023. That pushed it to a 23-year high, where it has stayed for more than a year.
Inflation has retreated steadily, approaching the Fed’s 2% target and leading Chair Jerome Powell to declare recently that it was largely under control.
Most analysts are expecting the Fed to cut its benchmark rate by only a traditional-sized quarter of a percentage point at its meeting next week, not the more severe half-point that some had been forecasting.
In recent news, there has been a slight increase in the number of Americans filing for unemployment benefits. While this may cause some concern, it is important to note that these levels are still historically low.
According to the latest data from the Labor Department, initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted 234,000 for the week ending June 9th. This marks the second straight weekly increase in jobless claims, but the overall trend remains positive as the number of claims has stayed below the 300,000 threshold for over three years now.
Economists attribute the slight uptick in unemployment benefit filings to seasonal factors such as school closures and summer hiring patterns. Despite this small increase, the labor market continues to show strength with unemployment rates at a 18-year low of 3.8% and job growth remaining steady.
It is also worth noting that the overall economy is performing well, with strong consumer spending, business investment, and GDP growth. This suggests that the increase in jobless claims is likely a temporary blip rather than a sign of a broader economic slowdown.
Additionally, the Federal Reserve has indicated that it will continue to gradually raise interest rates in response to the strong economy, which could further support job growth and wage increases in the coming months.
Overall, while the slight increase in unemployment benefit filings may raise some concerns, it is important to keep in mind that these levels are still historically low and the overall economic outlook remains positive. As long as job growth and consumer spending continue to be strong, the labor market should remain healthy in the months ahead.
