The numbers: The number of people who applied for unemployment benefits dipped to 250,000 in mid-August, suggesting that layoffs remain very low and the U.S. economy is still expanding.
Initial jobless claims fell by 2,000 from a revised 252,000 in the first week of August. What’s more, new filings in early August were lowered from a preliminary 262,000.
The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse.
New unemployment filings had fallen to as low as 166,000 in late March — the second-fewest on record — before turning higher in the spring and summer as the economy slowed. Lately new weekly claims have stabilized around the 250,000 mark.
Economists polled by the Wall Street Journal forecast new claims to total 260,000 in the seven days ended Aug. 13. The figures are seasonally adjusted.
Big picture: The economy is slowing in response to rising interest rates, but it’s still growing.
The Federal Reserve is jacking up the cost of borrowing to try to tame the biggest outbreak of U.S. inflation in almost 41 years. Higher rates typically discourage consumers and businesses from spending and investing.
Many companies are still trying to hire, however, and their biggest labor problem is finding enough workers to fill open jobs.
Key details: The decline in raw or actual jobless claims was broad-based.
Of the 53 states and U.S. territories that report jobless claims, 38 showed a decline and 15 reported an increase.
The four-week average of new jobless claims, which smooths out the temporary ups and downs, slipped by 3,000 to 247,000.
The number of people already collecting unemployment benefits, meanwhile, increased by 7,000 to 1.44 million. They are still near a 50-year low, however.
One caveat on jobless claims: The government’s data tends to be more erratic during the summer because of big changes in seasonal employment patterns. The pandemic appears to have made the problem worse.
“Claims have not behaved ‘normally’ in the context of expected seasonal patterns since the onset of the pandemic in 2020, so the Labor Department has had problems with finding the proper way to do seasonal adjustments,” said money market economist Thomas Simons at Jefferies LLC.
New jobless claims before seasonal adjustments, for instance, were much lower at 191,834 in the second week of August. Historically that’s a very low reading.
Looking ahead: “The labor market remains in good shape,” said economic adviser Stuart Hoffman of PNC Financial Services. “However, the rise in initial claims since early April is a cool breeze blowing at the hot labor market this summer.”