WASHINGTON: The number of Americans filing new claims for unemployment benefits fell last week, pointing to a firming labor market.
Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 197,000 for the week ended September 19, the Labor Department said on Thursday. Economists polled by Reuters had forecast 201,000 claims for the latest week.
Claims are near 57-year lows, partly attributed to difficulties seasonally adjusting the data around moving holidays like Labor Day. Economists have also noted what they refer to as residual seasonality that tends to push claims lower as the year winds down.
Still, the underlying trend in claims remains in line with a labor market that has regained its footing after stumbling through much of the summer, anchored by low layoffs.
Companies, however, remain hesitant to ramp up hiring amid what economists describe as headwinds from rising energy prices because of the US-Israeli war with Iran as well as tariffs on imports. Worker shortages as an immigration crackdown and retirements shrink the labor supply are also hindering hiring.
A survey from S&P Global on Wednesday noted that companies in September were “also reporting increasing problems finding suitable staff.”
The claims report showed the number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased 2,000 to a seasonally adjusted 1.719 million during the week ended September 12.
The so-called continuing claims covered the period during which the government surveyed households for September’s unemployment rate. Economists view continuing claims as consistent with a stable jobless rate. The unemployment rate was unchanged at 4.1% in August, though the data showed more people who had lost their jobs were experiencing long bouts of joblessness.
“After having been stable over the last few months, if continuing claims remain at lower levels, this could mean an unemployment rate closer to 4% over the next few months,” said Veronica Clark, an economist at Citigroup. “But we would caution that a lower unemployment rate because of a smaller labor force would not necessarily imply a retightening labor market.”
The Federal Reserve last week raised its overnight benchmark interest rate by 25 basis points to the 3.75%-4.00% range, the first hike in three years, and flagged further increases in borrowing costs in the months ahead. – Reuters
