Initial claims for state jobless benefits fell by a seasonally adjusted 2,000 to 231,000 for the week ended Aug. 24, the Labor Department reported on Thursday. Economists interviewed by Reuters had forecast 232,000 claims for the latest week.
Claims have rebounded from an 11-month high at the end of July as disruptions from the temporary shutdown of motor vehicle factories for new model overhauls and the effects of Hurricane Beryl fade. The data remained at a level consistent with a cooling labor market, which should help ease concerns about a rapid slowdown.
The Labor Department's Bureau of Labor Statistics last week estimated that job growth was overestimated by 68,000 jobs per month in the 12 months through March. But most economists view these benchmark revision estimates as misleading.
The slow momentum in the labor market, characterized by a large decline in hiring, has caught the attention of Federal Reserve policymakers. Fed Chairman Jerome Powell on Friday signaled that an interest rate cut is imminent in response to concerns about the job market.
Financial markets expect the U.S. central bank to will begin its tapering cycle next month with a 25 basis point reduction in its benchmark overnight interest rate, although a half percentage point reduction is also being considered. The Fed has kept its policy rate in the current 5.25%-5.50% range for more than a year, after raising it by 525 basis points in 2022 and 2023.
The number of people receiving benefits after the initial week of aid, which is a proxy for hiring, rose by 13,000 to a seasonally adjusted 1.868 million in the week ended Aug. 17, according to the claims report. These ongoing claims are close to levels last seen in late 2021, indicating a longer period of unemployment.
Continuous claims data covers the period in which the government surveys households to determine the unemployment rate for the month of August. Economists expect the unemployment rate this month to either remain close to a three-year high of 4.3% or fall to 4.2%.
The unemployment rate has risen for four consecutive months, partly reflecting an increase in the labor supply fueled by immigration.
