The number of Americans applying for unemployment benefits fell again last week to a four-month low, even as the Federal Reserve continues to aggressively cut interest rates to contain inflation.
The number of applications for unemployment assistance for the week ending September 10 fell by 5,000. to 213,000, the Labor Department said on Thursday. This is the least since the end of May.
First-time applications usually reflect the redundancies.
The four-week average for claims, which offsets some of the weekly volatility, decreased by 8,000 to 224,000.
In the week ending September 3, the number of Americans receiving traditional unemployment benefits rose by 2,000 to 1.4 million.
Employment in the U.S. in 2022 was remarkably strong, even amid rising interest rates and weak economic growth. The Federal Reserve has aggressively raised interest rates in an effort to bring inflation down, which generally also slows job growth.
Earlier this month, the Department of Labor said employers still added a strong 315,000 jobs in August, although less than the average of 487,000 a month last year. The unemployment rate rose to 3.7%, its highest level since February, but for a healthy reason: hundreds of thousands of people returned to the labor market and some did not find a job right away, so the government’s unemployment rate rose.
The US economy has been mixed this year. Economic growth slowed in the first half of 2022, which, according to some informal definitions, signals a recession.
But companies are still desperate for employees, posting more than 11 million job vacancies in July, meaning there are nearly two job vacancies for every unemployed American.
Inflation remains the biggest obstacle to a healthy US economy. Consumer price growth has slowed slightly in the past few months, mainly due to falling gas prices. But overall, prices for food and other essentials remain high enough that the Federal Reserve has signaled it will continue to raise its benchmark interest rate until prices return to normal levels.
Most economists expect the Fed to raise its benchmark rate by three-quarters of a point when it meets next week.
The Fed has already raised its short-term interest rate fourfold this year, and chairman Jerome Powell said the central bank will likely have to keep interest rates high enough to slow the economy “for a while” in order to contain the worst inflation in 40 years. Powell admitted the increases would hurt US households and businesses, but also said the pain would be greater if inflation remained at its current levels.
Some of this so-called pain has already begun, especially in the housing and technology sectors. Online real estate firms RedFin and Compass recently announced job cuts as rising interest rates spurped the housing market.
Other high-profile layoffs announced in recent months include Tesla, Netflix, Carvana and Coinbase.