The numbers: The number of Americans who applied for unemployment benefits last week fell to a two-month low of 228,000, reaffirming that the U.S. job market remains quite strong.
New jobless claims declined by 9,000 from 237,000 in the prior week, the government said.
Unemployment claims typically rise when the economy weakens and a recession approaches.
Claims have risen this year from historic lows, but the job market is still quite sturdy. The economy has added 1.7 million jobs in the first half of the year.
Read: ‘If you know a recession is coming, why would you hoard workers?’
Key details: New jobless claims dropped in 29 of the 53 states and territories that report these figures to the federal government.
The other 24 posted higher claims, with the biggest increases in just handful of states, including California, Georgia and South Carolina.
Jobless claims are often choppy in July due to the end of the school year, the July 4 holiday and annual temporary shutdowns of automobile plants to retool for new models.
The actual or unadjusted number of new jobless claims barely budged, slipping to 257,976 from 258,302 in the prior week. Actual claims are up sharply from a pandemic-era low of 152,000 last fall, however.
The number of people collecting unemployment benefits in the U.S., meanwhile, rose by 33,000 to 1.75 million. Yet the available evidence suggests laid-off workers are finding new jobs relatively quickly.
Big picture: The relatively small increase in jobless claims this year is a sign most companies have enough demand for their goods and services to keep workers busy.
As long as most people are working, the economy might be able to avoid a widely predicted recession. Many economists think rising interest rates orchestrated by the Federal Reserve to curb high inflation are bound to trigger a downturn by 2024.
Looking ahead: “Even with the increase this year, initial claims remain quite low on an historical basis,” said Stuart Hoffman, senior economic adviser at PNC Financial Services. “It is not yet clear if the increase in claims in 2023 is simply the result of a bit more slack in the labor market, or if it is a harbinger of bigger layoffs and an impending recession.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open lower in Thursday trades. A strong job market raises the odds of the Fed increasing interest rates again.
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