The number of Americans filing new applications for unemployment benefits unexpectedly fell last week, suggesting job growth picked up in September.
Initial claims for state unemployment benefits dropped 12,000 last week to a seasonally adjusted 219,000 for the week ending September 14, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week.
The labor market has cooled considerably, with a big step-down in hiring and decrease in job openings, which have raised concerns of a deterioration in conditions that could undermine the economic expansion. Layoffs, however, remain low.
The Federal Reserve on Wednesday cut interest rates by 50 basis points, the first reduction in borrowing costs since 2020. Fed Chair Jerome Powell told reporters “the labor market bears close watching,” but added that the U.S. central bank was not waiting for layoffs to rise before lowering borrowing costs.
Powell also said policymakers were not hearing from businesses that a rise in layoffs was “getting ready to happen,” adding “the time to support the labor market is when it’s strong, and not when you begin to see the layoffs.”
The Fed had raised its benchmark overnight interest rate by 525 basis points in 2022 and 2023 to a 5.25%-5.50% range.
Claims have been little changed since dropping from an 11-month high of 250,000 in late July, which economists mostly blamed on temporary plant shutdowns in the automobile industry.
The claims data covered the week during which the government surveyed business establishments for the nonfarm payrolls component of September’s employment report. Nonfarm payrolls increased by 142,000 jobs in August, below the average monthly gain of 202,000 over the past 12 months.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 14,000 to a seasonally adjusted 1.829 million during the week ending September 7, the claims report showed. The so-called continuing claims have declined from more than 2-1/2-year highs touched in July.
That jump was mostly attributed to policy changes in Minnesota that allowed nonteaching staff in the state to file for unemployment benefits during the summer school holidays. Continuing claims data next week could offer more clues on the health of the labor market in September.
—Lucia Mutikani, Reuters