Fewer Americans file jobless claims as U.S. labor market continues to defy elevated interest rates

The number of Americans filing for unemployment benefits fell slightly last week as the U.S. labor market remains healthy in the face of high interest rates.

Jobless claims ticked down by 2,000 to 231,000 for the week of Aug. 24, the Labor Department reported Thursday. That’s just below the 232,000 new filings analysts were expecting.

The four-week average of claims, which evens out some of the week-to-week volatility, fell by 4,750 to 231,500.

Weekly filings for unemployment benefits, which are considered a proxy for layoffs, remain low by historic standards. They have ticked up in recent months though.

From January through May, claims averaged a paltry 213,000 a week. But they started rising in May, hitting 250,000 in late July and adding to evidence that high interest rates were finally cooling a red-hot U.S. job market.

Employers added just 114,000 jobs in July, well below the January-June monthly average of nearly 218,000. The unemployment rate rose for the fourth straight month in July, though it remains low at 4.3%.

Last week, the Labor Department reported that the U.S. economy added 818,000 fewer jobs from April 2023 through March this year than were originally reported. The revised total supports evidence that the job market has been steadily slowing and likely reinforces the Federal Reserve’s plan to start cutting interest rates soon.

The Fed, in an attempt to stifle inflation that hit a four-decade high just over two years ago, raised its benchmark interest rate 11 times in 2022 and 2023. That pushed it to a 23-year high, where it has stayed for more than a year.

Inflation has retreated steadily, approaching the Fed’s 2% target and leading Fed Chair Jerome Powell to declare last week that it was largely under control. Most economists expect the Fed to begin cutting rates at its next meeting in September.

The total number of Americans collecting jobless benefits rose by 13,000 to 1.87 million for the week of Aug. 17.

Ott writes for the Associated Press.