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The numbers: The number of people who applied for unemployment benefits last week fell to a one-month low of 243,000, indicating layoffs remain near record lows and that a tight labor market is keeping the economy moving forward.
Initial jobless claims fell by 2,000 from a revised 245,000 in the prior week.
The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse.
New unemployment filings had fallen to as low as 166,000 in late March — the second-fewest on record — before turning higher as the economy slowed. They recently topped out this summer at 261,000 and have begun creeping lower again.
Economists polled by the Wall Street Journal forecast new claims to total 255,000 in the seven days ended Aug. 20. The figures are seasonally adjusted.
Big picture: Although the economy has slowed, most companies have not resorted to layoffs and many companies are still hiring.
The strong labor market is one of the biggest safeguards against the rising odds of recession, but the Federal Reserve is worried the worker shortage might worsen inflation by pushing up wages. The central bank could raise rates even higher to make sure inflation slows and potentially throw the economy into reverse.
Key details: Of the 53 states and U.S. territories that report jobless claims, 34 showed a decline and 19 reported an increase.
The number of people already collecting unemployment benefits, meanwhile, declined by 19,000 to 1.42 million. They remain near a 50-year low.
One caveat on jobless claims: The government’s data tends to be more erratic during the summer because of big changes in seasonal employment patterns. The pandemic appears to have made the problem worse.
New jobless claims before seasonal adjustments, for instance, were much lower at 184,414 in the third week of August. Historically that’s an extremely low reading.
Lookin
Looking ahead: “Initial jobless claims will gradually rise as economic growth slows and businesses focus on trimming inefficiencies in a shakier fundamental backdrop,” lead U.S. economist Oren Klatchin of Oxford Economics said in a note to clients.
“However, persistently scant labor supply will prevent a spike in jobless claims as employers will be concerned about how long it might take to fill open positions.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open higher in Thursday trades.
