US weekly jobless claims at two-month low as job market remains resilient

A sign advertising job openings is seen outside a Starbucks in Manhattan, New York City, New York, U.S., May 26, 2021. REUTERS/Andrew Kelly

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  • Weekly jobless claims fall by 5,000 to 232,000
  • Continuing claims rise by 26,000 to 1.438 million
  • Layoffs announced by US companies fall 21% in August

WASHINGTON, Sept 1 (Reuters) – The number of Americans filing new claims for unemployment benefits fell to a two-month low last week as layoffs fell in August, suggesting the Federal Reserve may continue to aggressively raise interest rates to slow the labor market .

The Labor Department’s weekly unemployment claims report on Thursday, the most recent data on the health of the economy, also showed that fewer people had applied for unemployment benefits in the previous week than originally expected. The data reflects strong demand for workers and tight labor market conditions. The Fed has raised rates sharply to keep inflation under control by dampening demand across the economy.

“The labor market remains strong and allows the Fed to aggressively raise interest rates,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

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Initial claims for state unemployment benefits fell by 5,000 to a seasonally adjusted 232,000 for the week ended Aug. 27, the lowest level since late June. Data for the previous week has been revised to show 6,000 fewer applications filed than previously. Economists polled by Reuters had forecast 248,000 applications for the past week.

Sharp interest rate hikes by the US central bank have increased the risk of a recession. There are still no signs of widespread layoffs. The Fed has raised its key rate by 225 basis points since March.

Unadjusted jobless claims fell by 2,492 to 176,793 last week. There were notable declines in Connecticut, Missouri, Oklahoma and Georgia. These offset the large increases in Massachusetts and New York.

The government announced this week that there were 11.2 million job vacancies at the end of July, with two jobs for every unemployed person. The resilience of the labor market continues to dispel fears that the economy is in recession after the contraction of gross domestic product in the first half of the year.

The number of people receiving benefits after a first week of help, an indicator of employment, rose by 26,000 to 1.438 million in the week ending August 20.

LOW LAYOFFS

The claims data has no bearing on the August jobs report, which is due out on Friday. Nonfarm payrolls likely rose by 300,000 jobs last month after jumping 528,000 in July, according to a Reuters survey of economists.

As job growth slows, labor market conditions remain tight.

A separate report by global outplacement firm Challenger, Gray & Christmas showed on Thursday that announced job cuts by US-based employers fell 21% to 20,485 in August. Although layoffs are up 30% from a year ago, they are down 27% in the first eight months of this year compared to the same period in 2021.

“Employment data continues to point to a strong labor market. Job vacancies are high, layoffs are low and workers appear to have slowed their quits,” said Andrew Challenger, senior vice president at Challenger. , Gray & Christmas. “If a recession is imminent, it is not yet reflected in the employment data.”

The tech industry accounted for nearly a quarter of announced job cuts in August. Tech companies have announced 14,408 layoffs so far this year, a 70% increase from the same period last year.

Overall, employers announced plans to hire 41,985 workers in August, up 65% from July.

Although hiring in August is down 55% from a year ago, it is up 18% so far in 2022 compared to the same period in 2021.

Economists still expect job growth to slow, especially as worker productivity continues to fall.

A third Labor Department report released Thursday showed nonfarm productivity contracted at an annualized rate of 4.1% in the latest quarter, revised up from the previously reported pace of contraction of 4.6% last month. It fell at a rate of 7.4% in the first quarter.

Productivity fell at a rate of 2.4% from a year ago, down from the 2.5% pace estimated last month. It was still the largest year-on-year decline since the government began tracking the series in the first quarter of 1948. read more

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Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

Our standards: The Thomson Reuters Trust Principles.

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