The latest data from the Labor Department shows that the number of Americans filing for unemployment benefits dropped to its lowest level in two months last week. Jobless claims fell by 5,000 to 227,000, which is the fewest since early July. This indicates that layoffs are relatively low despite other signs of a cooling labor market. The four-week average of claims also decreased to 230,000, the lowest since early June. While weekly filings for unemployment benefits have risen from earlier in the year, they are still low compared to historical standards.
Employers added only 114,000 jobs in July, significantly below the monthly average of nearly 218,000 from January to June. The unemployment rate has risen for the fourth consecutive month, reaching 4.3%. Economists are predicting that the August jobs report will show an increase to 160,000 added jobs and a decline in the unemployment rate to 4.2%. The strength or weakness of this report is likely to influence the Federal Reserve’s decision on how much to cut its benchmark interest rate.
A recent report from the Labor Department revealed that the U.S. economy added 818,000 fewer jobs from April 2023 through March this year than originally reported. This revision supports the evidence of a slowing job market and aligns with the Fed’s plan to begin cutting interest rates later this month. The Fed had raised its benchmark interest rate multiple times in 2022 and 2023 to combat high inflation. However, inflation has since decreased, approaching the Fed’s 2% target. Chair Jerome Powell has indicated that inflation is largely under control.
Traders are anticipating that the Fed will cut its benchmark rate by a full percentage point by the end of 2024, requiring larger cuts than the traditional quarter-point adjustments. This could happen at one of the upcoming meetings in the next few months. The total number of Americans collecting jobless benefits declined by 22,000 to 1.84 million for the week of Aug. 24, showing a positive trend in the labor market. Overall, the data reflects a complex economic landscape with various factors affecting job creation, unemployment rates, and monetary policy decisions by the Federal Reserve.
