Key facts
- US weekly jobless claims fell to 196,000, below the forecast of 208,000.
- The number of Americans receiving unemployment benefits dropped to 1.730 million.
- The Federal Reserve raised interest rates by 0.25% to a range of 3.75%-4.00%.
The number of Americans filing for unemployment benefits unexpectedly decreased last week, though the decline may not fully reflect the labor market's true health. Initial claims for state unemployment benefits fell by 10,000 to a seasonally adjusted 196,000 for the week ended September 12, according to the Labor Department. This figure was lower than the 208,000 forecast by economists polled by Reuters. The drop is likely influenced by seasonal volatility around the Labor Day holiday, making accurate adjustments difficult.
Despite the dip in claims, the underlying trend suggests a labor market that has stabilized after a period of weakness over the summer. The Federal Reserve, on Wednesday, increased its benchmark interest rate for the first time since July 2023 and signaled further rate hikes are probable. Fed Chairman Kevin Warsh highlighted the labor market as a key indicator of strength, noting that policymakers believe the unemployment rate is consistent with full employment.
The claims data was collected during the survey week for the nonfarm payroll component of September's employment report, which previously showed job growth of 162,000 in August. The report also indicated that the number of individuals receiving unemployment benefits after their initial claim period, a proxy for hiring, decreased by 39,000 to 1.730 million for the week ended September 5. Economists attribute the labor market's stability primarily to low layoff rates, with businesses remaining cautious about expanding hiring due to economic headwinds, including the conflict between the U.S. and Iran, which is impacting oil prices and inflation.