(Bloomberg) — Applications for US unemployment benefits fell to the lowest level since February, adding to evidence of a resilient labor market.
Initial jobless claims decreased by 13,000 to 216,000 in the week ended Sept. 2, Labor Department data showed Thursday. The figure was lower than all forecasts in a Bloomberg survey of economists.
Continuing claims, which are a proxy for the number of people receiving unemployment benefits, dropped to 1.68 million in the week ended Aug. 26. That’s the lowest level since July.
The labor market — while gradually softening — has proved a vital support to the economy. Solid hiring and limited layoffs have given consumers the wherewithal to keep spending, fueling optimism that the US can skirt a recession.
“The claims data are a reminder that labor market conditions may be cooling, but that the labor market is still tight,” Nancy Vanden Houten, lead US economist at Oxford Economics, said in a note.
While the Federal Reserve is likely to hold the line on interest rates at this month’s policy meeting, “more moderation in job growth will be needed to keep rate hikes further down the road off the table,” Vanden Houten said.
The claims data can be choppy from week to week, especially around holidays, and this period preceded Labor Day. The four-week moving average in initial claims, with smooths out some of the volatility, declined to 229,250.
On an unadjusted basis, initial claims edged lower, led by declines in Ohio and New York. New applications in Ohio fell more than 2,900 after bigger decreases in the prior two weeks.
What Bloomberg Economics Says…
The latest figure “suggests layoffs remain only scattered and selective. The job market is slowing, but not quickly enough to cause a broad wave of layoffs. Downside risks persist and jobless claims could start flashing yellow or even red once this summer’s stronger-than-expected activity passes.”
— Eliza Winger, economist
For the full note, click here
Separate figures out Thursday showed productivity, or nonfarm business employee output per hour, rose at an downwardly revised 3.5% annual rate in the second quarter.
Unit labor costs, or what a business pays employees to produce one unit of output, were revised higher to 2.2%, according to the Bureau of Labor Statistics.
–With assistance from Jordan Yadoo.
(Adds economists’ comments)
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