Fewer Americans filed for unemployment benefits last week as the labor market remains sturdy despite high interest rates.
The Labor Department reported Thursday that jobless claims for the week ending July 6 fell by 17,000 to 222,000 from 239,000 the previous week.
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The total number of Americans collecting unemployment benefits declined for the first time in 10 weeks. About 1.85 million Americans were collecting jobless benefits for the week of June 29, around 4,000 fewer than the previous week.
Economists say that because so-called continuing claims have been on the rise in recent months, it suggests that some who are receiving unemployment benefits are finding it more challenging to land jobs.
Weekly unemployment claims are widely considered as representative of layoffs.
The four-week average of claims, which evens out some of the week-to-week volatility, fell by 5,250 to 233,500.
The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 in an attempt to extinguish the four-decade high inflation that shook the economy after it rebounded from the COVID-19 recession of 2020. The Fed’s intention was to cool off a red-hot labor market and slow wage growth, which can fuel inflation.
Many economists had expected the rapid rate hikes would trigger a recession, but so far that hasn’t happened, thanks in large part to strong consumer demand and a resilient labor market. As inflation continues to ease, the Fed's goal of a soft-landing — bringing down inflation without causing a recession and mass layoffs — appears within reach.
The Fed’s next policy meeting comes at the end of this month, but few experts are expecting a rate cut then. However, investors are betting that there is nearly a 70% chance for a reduction at the Fed’s September meeting.
While the labor market remains historically healthy, recent government data suggest some softness creeping in.
Until last week, applications for jobless benefits were trending higher in June after mostly staying below 220,000 this year. The unemployment rate ticked up to 4.1% in June, despite the fact that America’s employers added 206,000 jobs.
Job postings in May rose slightly to 8.1 million, however, April’s figure was revised lower to 7.9 million, the first reading below 8 million since February 2021.