US jobless claims fall to 250k, showing little sign of rising layoffs

The payment: The number of people filing for unemployment benefits fell to 250,000 in mid-August, suggesting layoffs remain very low and the US economy continues to expand.

Initial jobless claims fell 2,000 from a revised 252,000 in the first week of August. In addition, new registrations were reduced from a provisional 262,000 at the beginning of August.

The number of people filing for unemployment benefits is one of the best barometers of whether the economy is getting better or worse.

New jobless claims had fallen to as high as 166,000 in late March – the second lowest on record – before rising higher in the spring and summer as the economy slowed. Recently, weekly new claims have stabilized around the 250,000 mark.

Economists polled by the Wall Street Journal are forecasting a total of 260,000 new applications in the seven days ending Aug. 13. The figures are seasonally adjusted.

Big picture: The economy is slowing in response to rising interest rates but is still growing.

The Federal Reserve is raising borrowing costs to try to tame the biggest burst of US inflation in nearly 41 years. Higher interest rates usually discourage consumers and businesses from spending and investing.

However, many companies are still trying to hire people, and their biggest labor problem is finding enough workers to fill vacancies.

Key data: The decline in crude, or actual, jobless claims was broad-based.

Of the 53 states and U.S. territories that report jobless claims, 38 saw a decrease and 15 saw an increase.

The four-week moving average of new jobless claims, smoothing out the temporary ups and downs, slipped 3k to 247k.

The number of people already receiving unemployment benefits rose by 7,000 to 1.44 million. However, they are still near a 50-year low.

A caveat on jobless claims: Government data tends to be more erratic in the summer due to big changes in seasonal employment patterns. The pandemic appears to have exacerbated the problem.

“Since the pandemic began in 2020, claims have not behaved ‘normally’ in the context of expected seasonal patterns, leaving the Department of Labor struggling to find the right way to make seasonal adjustments,” said Jefferies GMBH money market economist Thomas Simons.

For example, pre-seasonally adjusted jobless claims were significantly lower in the second week of August at 191,834. Historically, that’s a very low figure.

Looking ahead: “The job market remains in good shape,” said economic adviser Stuart Hoffman of PNC Financial Services. “However, the spike in initial claims since early April this summer is blowing for a cool breeze on the hot job market.”

Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
were set to open higher in Thursday trading. US jobless claims fall to 250k, showing little sign of rising layoffs

Brian Lowry

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