The latest data showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week as the impact of weather and temporary closures of auto factories gradually faded.

Data released by the U.S. Department of Labor on Thursday showed that the number of initial unemployment claims fell to 235,000 in the week ending July 20, lower than the previous value of 245,000 and the expected 238,000, marking the ninth consecutive week of more than 220,000. Prior to this, except for the first three months of 2024, the number of initial unemployment claims in other weeks was less than 220,000.

While initial jobless claims have risen slightly in recent months, they remain at historically healthy levels. The four-week average of initial jobless claims was 235,250, up 250 from the previous week.

The number of people continuing to claim unemployment benefits fell for the second time in the past three weeks. About 1.85 million Americans were receiving unemployment benefits in the week ending July 13, about 9,000 fewer than the previous week. However, this is the highest level since December 2021.

Continuing claims have been rising in recent months, a sign that some Americans collecting benefits are finding it increasingly difficult to find work.

The agency believes that the damage caused by Hurricane Beryl led to a surge in applications in Texas, and the temporary closure of auto plants for equipment retooling also drove the increase. However, layoffs remain at historically low levels.

The slowdown in the labor market is largely due to lower hiring as the Federal Reserve's aggressive rate hikes in 2022 and 2023 cool demand. The Fed has raised its benchmark lending rate 11 times starting in March 2022 as it tries to extinguish four decades of high inflation as it tries to revive the economy after the 2020 coronavirus recession.

The Fed aims to curb an overheated labor market and slow wage growth, which it believes will fuel inflation.

Currently, few analysts expect the Fed to cut interest rates at its meeting later this month, with most betting on the first rate cut in September. Financial markets expect the Fed to cut interest rates in September after the GDP data was released, followed by further cuts in November and December.

Strong consumer demand and a resilient labor market have helped avoid the recession that many economists had predicted during a period of sharp interest rate hikes. And as inflation continues to moderate, the Fed’s goal of lowering inflation without triggering a recession and mass layoffs appears within reach.

While the labor market remains historically healthy, recent government data have shown some signs of weakness: The U.S. unemployment rate rose to 4.1% in June, even as U.S. employers added 206,000 jobs; the number of job openings rose slightly to 8.1 million in May, but April data was revised down to 7.9 million, the first time it was below 8 million since February 2021.

The article is forwarded from: Jinshi Data