The number of Americans filing new claims for unemployment benefits unexpectedly declined last week, offering another indication of resilience in the US labour market even as the Federal Reserve tightens monetary policy.
Initial claims for state unemployment benefits fell by 10,000 to a seasonally adjusted 196,000 for the week ended September 12, the Labor Department said on Thursday.
Economists polled by Reuters had expected claims to rise to 208,000.
However, the decline may overstate the strength of the labour market.
Claims can be particularly volatile around public holidays, and the Labor Day holiday last week makes it difficult to adjust the figures for normal seasonal patterns.
Despite the weekly volatility, the underlying trend remains consistent with a labour market that has regained some stability after showing signs of weakness through much of the summer.
Continuing claims also decline
The number of Americans continuing to receive unemployment benefits fell by 39,000 to a seasonally adjusted 1.73 million in the week ended September 5.
The previous week’s figure was revised lower.
Continuing claims provide a broader indication of how quickly unemployed workers are finding new jobs, although the data lag initial claims by one week.
The latest figures came during the week in which the government surveyed employers for the nonfarm payrolls component of September’s employment report.
US employers added 162,000 jobs in August, following a sharp slowdown in job growth over the previous three months.
The labour market’s relative stability has largely been supported by low layoffs, while companies remain cautious about increasing hiring amid economic uncertainty.
Fed raises rates as inflation remains elevated
The claims data arrived a day after the Federal Reserve raised its benchmark interest rate for the first time since July 2023, taking the target range to 3.75%-4.00%.
Fed chairman Kevin Warsh said recent economic reports showed that the economy, including the labour market, remained strong.
Warsh pointed to the labour market as “one basic sign of strength” and said policymakers believed “that the unemployment rate is basically running consistent with full employment.”
However, he added that inflation was still above the central bank’s target and that tensions in the Middle East were also contributing to the policy challenge.
“All three of those things lend themselves to a firm unanimous decision today,” he said.
The central bank maintained its focus on inflation, which remains above its 2% target.
During a news conference, Warsh said inflation had been “too high ..COM.. for too long.”
“We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed,” he said.
“Today, the FOMC decided that this standard has not been satisfied.”
Labour market remains key for policy
The latest claims figures reinforce the contrast facing policymakers: layoffs remain relatively contained, but businesses are reluctant to expand hiring amid economic and inflationary pressures.
Economists have pointed to higher oil prices linked to the US-Israeli war with Iran as another source of uncertainty, potentially adding to inflation pressures.
Persistent labour-market strength could therefore remain an important consideration for the Federal Reserve as it weighs further monetary tightening against the risk of weakening employment conditions.
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