The numbers: The number of Americans who applied for unemployment benefits last week sank to 233,000 and receded from a one-year high, a sign the labor market is still in good shape despite a poor July jobs report.
The decline in new claims could soothe the anxiety on Wall Street after a tepid increase in new jobs in July contributed to a stock-market selloff. The report ignited fresh worries about a recession and debate about whether the Federal Reserve waited too long to cut high U.S. interest rates.
New claims fell by 17,000 in the seven days that ended Aug. 3 from 250,000 in the prior week, the government said Thursday. The latest reading marks a one-month low.
Economists polled by the Wall Street Journal had forecast new claims to total 240,000, based on seasonally adjusted figures.
An earlier surge in new claims in July appeared to stem mostly from people in Texas being unable to work after Hurricane Beryl.
Annual auto-plant shutdowns in states such as Michigan also contributed to the uptick in new unemployment filings.
The receding number of new claims looked even better based on actual filings — that is, before seasonal adjustments.
Raw claims dropped to an extremely low 203,054 to mark the fewest filings since the start of June.
Key details: New jobless claims fell in 25 of the 53 states and territories that report these figures to the federal government. The biggest declines took place in Michigan and Texas.
New claims rose in the other 28 states.
Automakers traditionally shut down plants in part of July to retool in order to build new models. Some states allow workers to file for temporary benefits.
New claims in Texas had also spiked in the wake of Hurricane Beryl.
The number of people already collecting unemployment benefits in the U.S., meanwhile, rose by 6,000 to 1.88 million, the government said.
A gradual increase in these so-called continuing claims indicates it’s taking longer for people who do lose jobs to find new ones.
Big picture: Businesses are not hiring as many people, but they are not firing many people, either. That’s a sign of a red-hot labor market cooling off and becoming more normal, not talking a big turn for the worse.
As long as unemployment stays low, the U.S. economy should continue to expand at a solid pace.
Looking ahead: “Today’s jobless claims data may ease some of the concerns raised by last week’s soft jobs report,” said Chris Larkin, managing director of trading and investing at E*Trade.
“But with inflation data due out next week and the stock market still working through its biggest pullback of the year, it’s unclear how much this will move the sentiment needle.”
