Applications for unemployment assistance not only fell to rates not seen since the spring, but also were lower than what most economists were expecting.
According to statistics released by the Labor Department Thursday, applications for jobless claims dropped to 218,000 for the week of Sept. 21.
That’s 4,000 fewer than the previous week, and represents the lowest total since mid-May. Analysts had been expecting 224,000.
The four-week average of claims fell by 3,500 to 224,750.
Weekly filings for unemployment benefits have fallen two straight weeks after rising modestly higher starting in late spring, according to a report from The Associated Press. Though still at historically healthy levels, the recent increase in jobless claims and other labor market data signaled that high interest rates may finally be taking a toll on the labor market.
With employment data weakening and inflation dropping to 2.5% — close to the Federal Reserve’s 2% target rate — the Fed last week cut its benchmark interest rate by a half of a percentage point as the central bank shifts its focus from taming inflation toward supporting the job market. The Fed’s goal is to achieve a rare “soft landing,” whereby it curbs inflation without causing a recession.
It was the Fed’s first rate cut in four years after a series of rate hikes in 2022 and 2023 pushed the federal funds rate to a two-decade high of 5.3%.
U.S. employers added a modest 142,000 jobs in August, up from a paltry 89,000 in July, but well below the January-June monthly average of nearly 218,000.
According to the Labor Department’s report Thursday, the total number of Americans collecting jobless benefits rose by 13,000 to about 1.83 million for the week of Sept. 14.
