The number of Americans filing new applications for unemployment benefits fell last week, reversing the prior week's jump, but the labor market has softened as both the demand for and supply of workers have diminished.
Though the report from the Labor Department on Thursday confirmed layoffs remained relatively low, the hiring side of the labor market has almost stalled. Demand for workers has slowed, with economists blaming uncertainty stemming from tariffs on imports. At the same time, an immigration crackdown has reduced labor supply, creating what Federal Reserve Chair Jerome Powell on Wednesday described as a "curious balance."
Economists welcomed the decline in applications as a sign of the economy's resilience. Some even suggested that the U.S. central bank's concerns about the labor market were probably overblown and further interest rate cuts were unwarranted.
"We were all battered by a lot of negative talk about the labor market in the Fed statements and Chair Powell's comments yesterday," said Carl Weinberg, chief economist at High Frequency Economics. "The steady trend in claims continues at a rate that is way too low to signal a recession. It also undermines calls for more and bigger rate cuts, both at the Fed and in the markets."
Initial claims for state unemployment benefits decreased 33,000 to a seasonally adjusted 231,000 for the week ended September 13. Claims in the prior week had jumped to 264,000, a level last seen in October 2021.
That increase in applications was concentrated in Texas, with the state's Workforce Commission later saying it had since the September 1 Labor Day holiday "observed an uptick in identity fraud claim attempts aimed at exploiting the unemployment insurance system."
Economists polled by Reuters had forecast 240,000 claims for the latest week. Unadjusted claims dropped 10,384 to 194,478 last week, with sharp decreases in Texas, Connecticut and Michigan. These drops more than offset notable increases in New York, South Carolina and Massachusetts.
There was a moderate increase in claims by federal workers, which are filed under a separate program and with a one-week lag. Filings could rise next month, with severance payments for thousands of public workers ending on September 30.
Source : Reuters