WASHINGTON (Reuters) – In light of increasing interest rates, there may have been a slight decline in the number of Americans who filed new applications for unemployment benefits last week.
The Labor Department reported on Thursday that initial claims for state unemployment benefits decreased by 2,000 to a seasonally adjusted 250,000 for the week ending August 13. 10,000 fewer applications were submitted than originally indicated, according to data for the previous week. Reuters polled economists, who predicted 265,000 applications for the most recent week.
In addition to the robust industrial production in July and the underlying retail sales increase, the Labor Department’s weekly report on unemployment claims on Thursday helped alleviate concerns that the economy was in a recession. The Federal Reserve may use the claims report, the most recent information on the state of the economy, as justification for another significant rate hike next month.
Mahir Rasheed, a US economist at Oxford Economics in New York, stated that “fears of widespread layoffs have yet to materialise.” However, despite increased uncertainty about inflation and GDP, we doubt that claims will increase significantly because labour demand continues to outpace labour supply.
For the week ending August 13, initial claims for state unemployment benefits decreased by 2,000 to a seasonally adjusted 250,000. 10,000 fewer claims were submitted than originally reported, according to data for the preceding week. Reuters polled economists, who predicted 265,000 applications for the most recent week.
Claims were far below the 270,000–300,000 range that experts say would indicate a meaningful slowdown in the job market as a result of the significant revision and last week’s slight fall.
Last week, unadjusted claims decreased by 4,536 to 191,834. Massachusetts saw a spike in applications, which was countered by large drops in California, Ohio, Texas, and Georgia.
As a result of the Fed’s vigorous monetary policy tightening drive to control inflation, businesses in the interest rate-sensitive housing and technology sectors have been laying off employees. However, firms abroad are desperate for employees. At the end of June, there were 10.7 million job opportunities, or 1.8 for every unemployed person.
Next month, the Federal Reserve of the United States is anticipated to increase its policy rate by 50 to 75 basis points. Since March, the Fed has increased its rate by 225 basis points.
Although Fed officials “saw that the labour market remained solid,” several also acknowledged “there were some initial signals of a deteriorating outlook for the labour market,” according to minutes of the July 26–27 policy meeting that were published on Wednesday.
According to Christopher Rupkey, chief economist at FWDBONDS in New York, “the coast is clear for Fed officials to keep on pushing on interest rates to slow the economy because the earliest indicators showing distress in the labour market are not definitive on whether a recession is weeks away, months away, or even coming at all.”
The claims statistics from last week encompassed the time frame in which the agency questioned firms for the jobs report’s nonfarm payrolls section in August. Between the July and August survey periods, claims decreased. In July, the economy generated 528,000 new employment.
The likelihood of employment growth in August will be better understood next week when data on the number of persons receiving benefits after a first week of assistance are released.
In the week ending August 6, the so-called continuing claims, a stand-in for hiring, increased by 7,000 to 1.437 million.