The number of Americans applying for unemployment benefits fell to a four-month low last week.
Claims for jobless benefits fell by 12,000, to 219,000, for the week of September 14, based on a Labor Department report on Thursday. This number was lower than economists' expectations of 230,000 new applications.
Weekly claims for jobless benefits, which are thought to represent layoffs, have risen modestly since May before this week's decline. While still at historically healthy levels, recent increases signal that high interest rates may finally have an impact on the job market.
In response to weaker jobs data and lower consumer prices, the Federal Reserve on Wednesday cut its benchmark interest rate by half a percentage point as the central bank shifted its focus from controlling inflation to supporting the job market. The Fed's goal is to achieve a rare "soft landing," where it controls inflation without causing a recession.
"The focus has now shifted firmly to the jobs market, and there is a sense that the Fed is trying to strike a better balance between jobs and inflation," said Stephen Innes of SPI Asset Management.
This is the first time the Fed has cut interest rates in four years after a series of rate hikes in 2022 and 2023 that pushed the federal funds rate to a two-decade high of 5.3%.
Inflation has gradually declined, approaching the Fed's 2% target, and led Chairman Jerome Powell to recently declare that inflation is largely under control.
Over the first four months of 2024, jobless claims averaged just 213,000 a week before rising in May. It reached 250,000 at the end of July, supporting the notion that high interest rates have finally succeeded in cooling the previously red-hot US job market.
US employers added 142,000 jobs in August, up from just 89,000 in July, but still well below the monthly average from January to June of nearly 218,000.
Last month, the Labor Department reported that the US economy added 818,000 fewer jobs from April 2023 to March of this year than originally reported. These revised numbers are also considered evidence that the job market has slowed steadily, forcing the Fed to start cutting interest rates.
A Labor Department report this week showed that the four-week average claims, which flattened out some of the weekly fluctuations, decreased by 3,500 to 227,500.
The total number of Americans receiving unemployment benefits fell by 14,000 to about 1.83 million for the week of September 7, the lowest number since early June.
