Fewer Americans applied for unemployment benefits last week as the labor market unexpectedly fell last week.
U.S. applications for jobless claims fell by 9,000 to 228,000 for the week ending July 15, from 237,000 previous week, the Labor Department reported Thursday.
The drop in jobless claims was the lowest in two months amid ongoing labor market tightness and defying efforts by the Federal Reserve to slow demand.
Jobless claim applications are viewed as reflective of the number of layoffs in a given week. Overall, 1.75 million people were collecting unemployment benefits the week that ended July 8, about 33,000 more than the previous week, reports US News.
For three weeks in late May and early June, jobless claims had appeared to reach a sustained, higher level, above 260,000. But the past four weeks, claims have retreated and the labor market remains historically healthy.
Surprisingly, despite the fastest interest rate hikes since 1989, the unemployment rate has hardly budged and remains historically low at 3.6 percent.
Federal officials are saying that the unemployment rate needs to rise well past 4 percent to bring inflation down, but a report last week showed that consumer prices fell to their lowest level since early 2021 — 3 percent in June compared with a year earlier.
“The claims data show that the labor market remains resilient and businesses have yet to start shedding workers at a rapid pace, despite five percentage points of tightening,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York, according to Reuters.
The U.S. central bank, which has raised its policy rate by 500 basis points since March 2022, is expected to resume hiking rates next month after skipping an increase at its meeting in June.
The U.S. economy has broadly been resilient in the face of the Federal Reserve’s aggressive rate-hiking campaign in its effort to extinguish persistent inflation not seen since the early 1980s.
