U.S. jobless claims unexpectedly fall, show sustained labor market strength
The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained labor market strength even as the pace of job growth is slowing.
Despite signs of underlying labor market strength, also corroborated by record high job openings, August’s slowdown in job growth, together with sluggish factory and services sector activity could encourage the Federal Reserve to keep interest rates unchanged at its Sept. 20-21 policy meeting.
“The labor market has not been this good since the 1970s. The Fed has operational risk,” said Chris Rupkey, chief economist at MUFG Union Bank in New York. “Rates are a long way from normal levels and the Fed has no firepower to come to the aid of the economy if a recession were to hit.” Initial claims for state unemployment benefits decreased 4,000 to a seasonally adjusted 259,000 for the week ended Sept.3, the lowest level since mid-July, the Labor Department said on Thursday. Economists had forecast first-time applications for jobless benefits rising to 265,000 in the latest week. It was the 79th straight week that claims remained belowthe 300,000 threshold, which is associated with robust labor market conditions. That is the longest stretch since 1970, when the labor market was much smaller.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,750 to 261,250 last week.
U.S. financial markets were little moved by the data. The dollar touched a two-week low against the euro after European Central Bank President Mario Draghi said an extension of the ECB’s asset-purchase program was not discussed at Thursday’s meeting.
Prices for U.S. government debt fell, as did U.S. stocks.
The U.S. central bank raised its benchmark overnight interest rate at the end of last year for the first time in nearly a decade, but has held it steady since amid concerns over persistently low inflation.
