The number of Americans filing new applications for jobless benefits fell to its lowest level in two months last week as layoffs remained low, according to a Labor Department report released on Thursday.
The report showed that jobless claims dropped by 5,000 to 227,000 for the week of August 31. That’s the lowest number of jobless claims since the week of July 6, when 223,000 Americans filed for jobless benefits.
Through April, jobless claims averaged 213,000 a week, but that number began increasing in May and reached 250,000 by the end of July.
“The jobless claims data remain consistent with a gradual increase in unemployment, rather than the sharp jump reported for July,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told Reuters.
A ‘Now Hiring’ sign is displayed outside a resale clothing shop on June 2, 2023, in Los Angeles, California. Thursday’s Labor Department report showed a decline in new applications for jobless benefits.
Photo by Mario Tama/Getty Images
Meanwhile, this past July, 1.5 million Americans were experiencing long-term unemployment, meaning they have been jobless for 27 weeks or more, according to the U.S. Bureau of Labor Statistics. The unemployment rate slightly rose in July by 0.2 percentage points to 4.3 percent.
While fewer Americans are filing for unemployment, fewer companies are seeking to hire workers, according to the Labor Department.
In July, there were 7.7 million jobs open, which is down from the 7.9 million open jobs in June, according to a Labor Department report released on Wednesday. Meanwhile, the number of hires increased from June to July—5.2 million to 5.5 million. The job opening rate was at 4.6 percent in July. While job openings did decrease last month, the Labor Department noted that this was a “little” change.
A Reuters survey of economists found that Friday’s jobs report for August, which is not related to the new claims data, will likely show an increase of 160,000 jobs from July’s 114,000 jobs. The unemployment rate in August is also expected to fall to 4.2 percent.
Meanwhile, the Federal Reserve is anticipated to cut its benchmark interest rate by a full percentage point by the end of the year, which will boost the economy.
The federal funds rate is the target interest rate range at which banks borrow and lend their excess reserves to each other overnight. If the federal funds rate decreases, it can cause inflation to decrease because short-term interest rates are lower, which increases the supply of money and makes it cheaper to get credit.
Additionally, when the Fed cuts its rate, stocks typically increase because the borrowing costs for public companies should fall, making it cheaper for the companies to increase their earnings.
This article includes reporting from The Associated Press.
