The number of Americans applying for unemployment benefits hit a four-month low last week, according to new data from the U.S. Department of Labor.
There were 218,000 jobless claims in the week ending September 21, a 4,000 drop from the week before, the Labor Department reported on Thursday. This decrease marked the fewest job claims since mid-May and was less than the 224,000 claims analysts expected.
Though the weekly total shows some volatility, the four-week average of claims for unemployment benefits also sank by 3,500 to 224,750.
Jobless claims are still at historically healthy levels but were modestly climbing starting in late spring. This increase, along with other labor market data, suggests that high interest rates may finally be hurting the market.
The Federal Reserve raised its benchmark rate, known as the federal funds rate, 11 times in 2022 and 2023 to curb high inflation, which hit both the United States and countries around the world after the COVID-19 pandemic.
Last week, the Fed Reserve cut interest rates for the first time in over four years. The interest rate, which was at a 23-year high, came down by a large half-percentage point to between 4.75 to 5 percent.
Stock image of a help wanted sign. The number of Americans applying for unemployment benefits hit a four-month low last week.
Ablokhin via Getty Images
The federal funds rate is the target interest rate at which commercial banks borrow and lend their extra reserves to one another overnight. The cost of consumer borrowing, including mortgages, auto loans and credit cards, should go down over time with a series of Fed cuts.
Meanwhile, American employers added a modest 142,000 jobs in August, up from the dismal 89,000 jobs added in July. However, August’s numbers are pretty far down from the monthly average of nearly 218,000 jobs added in the first six months of the year.
President Joe Biden‘s administration has touted the exponential job growth in the United States in recent years after millions of Americans lost their jobs during the COVID pandemic.
About 17.75 million Americans were unemployed in June 2020, according to the U.S. Bureau of Labor Statistics. This past August, 1.5 million Americans were experiencing long-term unemployment, meaning they had reported being jobless for 27 weeks or more, the bureau said.
While the number of Americans currently collecting jobless benefits last week is not available yet, the Department of Labor said on Thursday that 1,834,000 Americans received unemployment in the week ending September 14, a 13,000 increase from the previous week.
This article includes reporting from The Associated Press.
