Jobless claims rise slightly to 230K as employment market continues to cool

The number of Americans filing new applications for unemployment benefits last week rose slightly to 230,000, matching economists’ expectations as the US job market continues to cool.

Jobless claims increased by 2,000 in the week ended Sept. 7 from 228,000 the week before, according to labor department data.

Economists polled by Reuters had forecast a reading of 230,000.

The latest jobless claims figures are a positive sign, showing the US labor market is remaining resilient despite a hiring slump.

Last week’s data included the Labor Day holiday.

US labor market added just 142,000 jobs in August, weaker than expected

Claims tend to be volatile around public holidays. They have, however, been little changed since dropping from an 11-month high of 250,000 in late July.

Government data last week showed nonfarm payrolls increasing by less than expected in August but the unemployment rate falling to 4.2% from 4.3% in July.

The Fed’s aggressive post-pandemic interest rate hikes in 2022 and 2023 damped demand, which stunted hiring and led to a labor market slowdown.

The central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range for a year, having raised it by 525 basis points in 2022 and 2023.

US job openings fall to lowest level since January 2021

Though economists forecast the US would face a recession after the series of rate hikes, easing inflation has spurred hopes that the Fed will be able to deliver a soft landing.

Weakening employment and easing inflation over the past few weeks has fueled investors’ hopes that the Fed will issue a 50-basis point during its meeting cut next week.

But higher-than-expected core inflation figures reported Wednesday morning seemingly dashed hopes for the 50-basis point cut — equal to half a percentage point — that traders were vying for versus the more typical 25-basis point cut.

After the core inflation data, traders now see an 87% chance of the Fed cutting interest rates by 25 bps when it meets on Sept. 17-18, according to CME’s FedWatch Tool. It would be the first rate cut since March 2020.

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Federal Reserve Chair Jerome Powell has hinted that interest rate cuts could come in September if inflation continues to ease and the job market continues to cool.

“The time has come for policy to adjust,” Powell said in late August.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 5,000 to a seasonally adjusted 1.850 million during the week ending Aug. 31, the claims report showed.

These continuing claims have leveled out since spiking in July to levels last seen in 2021.

The four-week moving average — which helps cancel out unusual spikes and dips — was 230,750, an increase of 500 from the previous week’s revised average.

Multiple major US companies have issued layoffs this year. Media outlets like CNN and Time issued layoffs, along with tech companies like Apple and automakers like General Motors and Stellantis.

With Post wires

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