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Applications for unemployment benefits for the week ending Aug.
23 dropped 5,000 to 229,000, the Labor Department reported
Thursday.
Measures of the job market are being closely watched on Wall
Street and by the Federal Reserve as the most recent government
data suggests hiring has slowed sharply since this spring. Job
gains have averaged just 35,000 a month in the three months
ending in July, barely one-quarter what they were a year ago.
Weekly applications for jobless benefits are seen as a proxy for
layoffs and have mostly settled in a historically healthy range
between 200,000 and 250,000 since the U.S. began to emerge from
the COVID-19 pandemic more than three years ago.
While layoffs are low, hiring has also weakened as part of what
many economists describe as a “no hire, no fire” economy. Still,
the unemployment rate remains a low 4.2%.
Growth has weakened so far this year as many companies have
pulled back on expansion projects amid the uncertainty
surrounding the impacts of President Donald Trump’s tariff
policies. Growth slowed to a 1.3% annual rate in the first half
of the year, down from 2.5% in 2024.
The sluggishness in the job market is a key reason that Federal
Reserve Chair Jerome Powell signaled last week that the central
bank may cut its key interest rate at its next meeting Sept.
16-17. A cut could reduce other borrowing costs in the economy,
including mortgages, auto loans, and business loans.
The Labor Department’s report also showed that the four-week
average of claims, which softens some of the week-to-week
swings, rose by 2,500 to 228,500.
The total number of Americans collecting unemployment benefits
for the previous week of Aug. 16 fell 7,000 to 1.95 million,
down from nearly a four-year high reached earlier this month.
The stubbornly high number of people continuing to collect
jobless aid suggests that once out of work, many Americans are
having trouble finding new jobs.
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