U.S. Jobless Claims Unexpectedly Drop To Nearly Seven-Month Low

First-time claims for U.S. unemployment benefits unexpectedly saw a continued decline in the week ended September 2nd, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims fell to 216,000, a decrease of 13,000 from the previous week’s revised level of 229,000.

Economists had expected jobless claims to rise to 234,000 from the 228,000 originally reported for the previous week.

Jobless claims decreased for the fourth consecutive week, falling to their lowest level since a matching figure in the week ended February 11th.

The Labor Department said the less volatile four-week moving average also slipped to 229,250, a decrease of 8,500 from the previous week’s revised average of 237,750.

Continuing claims, a reading on the number of people receiving ongoing unemployment, also slid by 40,000 to 1.679 million in the week ended August 26th.

The four-week moving average of continuing claims also edged down to 1,701,500, a decrease of 1,250 from the previous week’s revised average of 1,702,750.

“The claims data are a reminder that labor market conditions may be cooling, but the labor market is still tight,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, “The claims figures don’t change our view for the Fed to keep policy steady at its meeting later this month, but more moderation in job growth will be needed to keep rate hikes permanently off the table.”

The Labor Department released a more closely watched report last Friday showing modestly stronger than expected job growth in the month of August, although the report also showed an unexpected increase in the unemployment rate.

The report said employment climbed by 187,000 jobs in August compared to economist estimates for the addition of 170,000 jobs.

Meanwhile, the report also showed notable downward revisions to pace of job growth in the two previous months.

Revised data showed employment rose by 105,000 jobs in June and by 157,000 jobs in July, reflecting a combined downward revision of 110,000 jobs.

The Labor Department also said the unemployment rate climbed to 3.8 percent in August from 3.5 percent in July. Economists had expected the unemployment rate to remain unchanged.

With the unexpected increase, the unemployment rate reached its highest level since hitting a matching rate in March 2022.

The advance by the unemployment rate came as the size of the labor force surged by 736,000 persons, while the household survey measure of employment rose by 222,000 persons.

A separate report released by the Labor Department on Thursday showed labor productivity in the U.S. jumped by less than previously estimated in the second quarter.

The Labor Department said the surge in productivity in the second quarter was downwardly revised to 3.5 percent from 3.7 percent. Economists had expected the pace of growth to be upwardly revised to 3.8 percent.

The spike in labor productivity in the first quarter still reflects a notable rebound from the 1.2 percent slump in the first quarter.

Meanwhile, the report said the jump in unit labor costs in the second quarter was upwardly revised to 2.2 percent from 1.6 percent. Economists had expected the increase to be unrevised.

The bigger than previously estimated increase in unit labor costs in the second quarter came on the heels of a 3.3 percent surge in the first quarter.

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