Economic Report


Unemployment filings at lowest level since May

A ‘Now Hiring’ sign in Los Angeles. Many companies are still hiring, but they are adding jobs at a slower pace and generally avoiding layoffs.

Mario Tama/Getty Images

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The numbers: The number of people who applied for unemployment benefits in the first week of September fell to a 3 1/2-month low of 222,000, a sign layoffs are still near a record low even as the U.S. economy softens.

New jobless claims declined by 6,000 in the seven days ended Sept. 3 from a revised 228,000 (initially 232,000) in the prior week. New claims have dropped four weeks in a row.

The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse.

New unemployment filings had fallen to as low as 166,000 in late March — the second-fewest on record — before turning higher over the summer. They recently topped out at 261,000 before moving lower again.

Economists polled by the Wall Street Journal had forecast new claims to total 235,000 in the first week of September. The figures are seasonally adjusted.

Big picture: The economy has slowed due to rising interest rates orchestrated by the Federal Reserve to try to rein in high inflation. Yet the labor market remains quite strong and that could make the Fed’s job harder.

The central bank wants hiring to slow to ease the worst labor shortage in modern times and restrain the growth in worker pay. The Fed worries that rapidly increasing wages could fuel more inflation.

If the Fed raises interest rates too high, however, the central bank could also plunge the U.S. into another recession and drive up the nation’s 3.7% unemployment rate.

Key details: Of the 53 states and U.S. territories that report jobless claims, 29 showed an increase and 24 reported a decline. Most of the changes were small.

The number of people already collecting unemployment benefits, meanwhile, rose by 36,000 to 1.47 million in the week ended Aug. 27. These so-called continuing claims remain near a 50-year low, however.

One caveat on jobless claims: The government’s adjusted data has been more erratic since the pandemic, and that’s been especially so since the spring.

New jobless claims before seasonal adjustments, for instance, have been extremely low since March. Last week they totaled 175,842, one of the lowest readings on record.

Looking ahead: “Demand for labor remains quite strong,” said money market economist Thomas Simons on Jefferies LLC. “There is a little bit more turnover in the labor market than what we experienced last year and early in 2022, but it remains the case that workers who are let go are still having a relatively easy time finding a new job.”

Market reaction:  The Dow Jones Industrial Average DJIA, +1.19% and S&P 500 SPX, +1.53% were set to open slightly lower in Thursday trades.