US jobless claims rise in latest week

THE number of Americans filing new applications for unemployment benefits rose in the latest week, but the level still suggested a gradual cooling of the labour market remains intact. Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 232,000 for the week ended Aug 17, the Labor Department said on Thursday (Aug 22). Economists polled by Reuters had forecast 230,000 claims for the latest week.

The latest data should continue to allay fears that the labour market is rapidly deteriorating, first raised after a much sharper than expected slowdown in job gains in July, which also saw the unemployment rate rise to a post-pandemic high of 4.3 per cent.

Federal Reserve officials have said they are keenly watching the labour market, aware that waiting too long to cut interest rates could cause serious harm.

Layoffs remain historically low, however, with much of the slowdown in the labour market coming from firms scaling back hiring, trailing an immigration-induced surge in labour supply.

The Federal Reserve’s 525 basis points worth of rate hikes in 2022 and 2023 are curbing demand.

The US central bank has kept its benchmark overnight interest rate in the current 5.25 per cent-5.50 per cent range for more than a year, but is now widely expected to begin a rate-cutting cycle at its next policy meeting on Sept 17-18.

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The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 4,000 to a seasonally adjusted 1.863 million during the week ending Aug 10, the claims report showed. REUTERS