The number of Americans applying for unemployment benefits fell last week, signaling that the job market remains strong despite high interest rates. Jobless claims dropped by 7,000 to 227,000.
The four-week average of claims fell by 4,500 to 236,500. As of the week ending August 3rd, 1.86 million Americans were receiving jobless benefits, a decrease of 7,000 from the previous week.
Weekly unemployment benefit filings are often seen as a sign of layoffs. However, they remain low by historical standards. Claims averaged 213,000 per week from January through May.
They increased to 250,000 in late July. This rise has raised concerns that high interest rates might hurt the job market. However, the recent decline in claims suggests that the increase may have been temporary.
Jobless claims signal market resilience
“Claims calmed down, and their recent rise appears to be just a blip, not a fundamental shift in the labor market,” said Robert Frick, an economist at the Navy Federal Credit Union. The Federal Reserve raised its benchmark interest rate 11 times between 2022 and 2023 to fight inflation.
This brought it to a 23-year high. Inflation has steadily decreased, from 9.1% in June 2022 to a three-year low of 2.9% last month. Despite higher borrowing costs, the economy and job market have shown strength.
This has gone against predictions of a recession. However, employers added just 114,000 jobs in July, much lower than the January-June average of nearly 218,000.
The unemployment rate has also increased for the fourth month in a row. However, it remains low at 4.3%. Monthly job openings have dropped steadily since reaching 12.2 million in March 2022.
They were down to 8.2 million by June. With signs of economic slowdown building up and inflation nearing its 2% target, the Federal Reserve is expected to consider cutting rates at its next meeting in September.
