The latest report from the Labor Department indicates that the number of Americans applying for unemployment benefits rose slightly last week, reaching 225,000 for the week of Sept. 28. While this was higher than the expectations of analysts, the four-week average of claims actually decreased to 224,250. Applications for jobless benefits are seen as a measure of U.S. layoffs in a given week, and recent data suggests that high interest rates may be impacting the labor market. As a response to weakening employment data and declining consumer prices, the Federal Reserve cut its benchmark interest rate by half a percentage point, aiming to support the job market and achieve a “soft landing.”
This rate cut was the first by the Fed in four years, following a series of rate hikes that had pushed the federal funds rate to a two-decade high of 5.3%. Inflation has been easing, approaching the Fed’s 2% target, and Chair Jerome Powell has stated that it is largely under control. Despite the fact that applications for jobless benefits had been averaging around 213,000 per week earlier in 2024, there was a rise in May and the number hit 250,000 in late July. This increase suggests that the hot U.S. job market may be cooling off due to the impact of high interest rates.
In August, U.S. employers added 142,000 jobs, a slight improvement from the previous month but significantly lower than the monthly average from earlier in the year. The upcoming September jobs report will provide more insights into the current state of the labor market. Additionally, a recent revision by the Labor Department showed that the U.S. economy added fewer jobs than initially reported from April 2023 to March this year, indicating a slowdown in job growth. This trend prompted the Fed to start cutting interest rates in an effort to support the economy.
The report also noted that the total number of Americans collecting jobless benefits decreased slightly to around 1.83 million for the week of Sept. 21. On a separate note, some retailers announced that they are increasing hiring for the upcoming holiday season, although they anticipate bringing on fewer seasonal employees compared to previous years. This could be a reflection of the overall economic conditions and the impact of changing labor market dynamics. The Federal Reserve’s actions and the upcoming jobs report will continue to be closely monitored to gauge the health of the U.S. economy and labor market.
