The number of Americans filing new claims for jobless benefits fell last week and data for the prior period was revised down, suggesting that labor market conditions remain tight, although rising interest rates are on the rise. stopping the momentum.
The weekly jobless claims report released by the Labor Department on Thursday added to strong July industrial production and underlying growth in retail sales to allay fears the economy is in a recession.
The jobless claims report, the most timely piece of data on the health of the economy, could give the Federal Reserve (Fed) ammunition to carry out another sharp rate hike next month.
“Fears of widespread layoffs have yet to materialize,” said Mahir Rasheed, a US economist at Oxford Economics in New York.
“Even so, we doubt claims will accelerate sharply as labor demand remains well above labor supply, while the outlook for the economy remains relatively positive despite heightened uncertainty over the inflation and growth.
Initial claims for state jobless benefits fell by 2,000, to a seasonally adjusted figure of 250,000, in the week ending August 13.
The previous week’s data was revised to show 10,000 fewer claims than previously reported. Economists polled by Reuters had forecast 265,000 claims for the latest week.
Last week’s sharp revision and modest decline pushed claims well below the 270,000-300,000 range that economists say would signal a major labor market slowdown.
Unadjusted claims fell by 4,536 to 191,834 last week. An increase in applications in Massachusetts was offset by notable declines in California, Ohio, Texas and Georgia.
Firms in the interest rate-sensitive housing and technology sectors have been laying off workers in response to slowing demand triggered by the Federal Reserve’s aggressive monetary policy tightening campaign to control inflation. .
In other sectors, however, companies are hungry for workers. At the end of June, there were 10.7 million job vacancies, with 1.8 job openings for every unemployed worker.
The market expects the US central bank to raise its official interest rate by between 50 and 75 basis points next month. The Fed has raised its rate by 225 basis points since March.
Minutes from the July 26-27 monetary policy meeting, released Wednesday, showed that while Fed officials “observed that the labor market remained strong,” many of them also noted that “there were some tentative signs of a weakening labor market outlook.
“Federal Reserve officials have a free hand to keep pushing interest rates to rein in the economy as early indicators showing labor market difficulties are not definitive as to whether a recession is weeks away.” or months away, or even if it’s going to come,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
Last week’s claims data covered the period during which the government surveyed businesses for the nonfarm payrolls portion of the August employment report. Requests fell between the July and August survey periods. The economy created 528,000 jobs in July.
Next week’s data on the number of people receiving benefits after a first week of aid will shed more light on the outlook for job growth in August.
So-called continuing claims, a gauge of hiring, rose by 7 billion to 1.437 million in the week ending Aug. 6.
