The number of new applications for US unemployment benefit fell last week, but weak hiring may push up the rate in August.
Labor Department reported Thursday that the number of initial claims for unemployment insurance benefits for states decreased by 5,000, to 229,000 seasonally-adjusted for the week ended August 23.
Reuters polled economists who expected 230,000 claimants.
These figures show that the job market is stable, and there are few layoffs.
The job growth has been markedly slower than last year. This raises concerns over the capacity of the economy to create new jobs.
As trade policy takes a toll, hiring stagnates
Government figures released in early August show that employment growth averaged 35, 000 jobs per month in the three previous months. This is a significant decrease from 123,000, which was the average for the same time period in 2024.
Economists say that the economic slowdown stems from a larger dynamic of “no hire, no fire” resulting President Donald Trump’s trade protectionist strategy.
Tariffs imposed by the administration have increased average import duties to their highest levels in over a century. This has dampened domestic demand, and businesses are less likely to hire new workers.
Many analysts expect the rate of unemployment to increase to 4,3% from the current 4.2% by August.
Fed considers the impact of low payrolls on inflation
Federal Reserve has taken note of the changing landscape for workers.
Last week, Chairman Jerome Powell suggested that policymakers may cut rates at the September 16-17 central bank meeting due to the risk of a downward impact on jobs.
Powell also stressed that high inflation is still a problem in the US, complicating the Fed’s decision-making.
Since December, the Fed’s key overnight rate has been in a range of 4.25% to 4.50%. It is trying to find a balance between a slowing economy and unstable prices.
Continuing claims edge lower
According to the weekly claims report, the number of individuals receiving aid after the first week, which is a proxy of hiring, decreased by 7,000, to seasonally-adjusted 1.954 millions in the week ended August 16.
Continued claims data and the August unemployment rate were calculated using government household surveys.
The Trump administration’s crackdown on immigration has led to a shrinking pool of labour, which is dampening the effect that weak hiring can have on unemployment.
The economy must now create fewer than 90.000 jobs per month in order to keep up with population growth.
Pessimistic attitudes among consumers
The consumer sentiment is getting more and more strained.
A Conference Board poll released this week revealed that the percentage of Americans who believe it is “hard” to find a job increased to its highest levels in over four-and-ahalf years in August.
Results show an increase in claims that are still pending and a decrease in confidence in the labour market.
The unemployment rate is relatively stable despite the worsening of the economy, due to the fact that there have been few layoffs, and the labour force has grown slower.
However, economists caution that this trend may mask deeper vulnerabilities.
The post US Jobless Claims Slip, But Weak Hiring Could Push August Unemployment to 4.3% could be updated as new developments unfold.
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