The number of Americans filing new applications for unemployment benefits dropped to a four-month low last week, pointing to solid job growth in September – a new data point which could cheer the stock market a day after the news on more than expected cut in interest rate.
The latest unemployment data also offers confirmation that the US economy continued to expand in the third quarter.
The weekly jobless claims report from the Labor Department on Thursday also showed jobless rolls shrunk to levels last seen in early June, Reuters reported.
The US central bank on Wednesday cut interest rates by 50 basis points to the 4.75 – 5.00 per cent range, the first reduction in borrowing costs since 2020, which Federal Reserve Chair Jerome Powell said was meant to demonstrate policymakers’ commitment to sustaining a low unemployment rate.
“These hard numbers confirm the message delivered by Fed Chair Powell yesterday,” said Carl Weinberg, chief economist at High Frequency Economics.
“The labour market is softening but not imploding as you would expect in a recession. Fed policy is aimed at supporting the job market before a recession shapes up,” he said.
Jobless rate signals labour cooling
Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 219,000 for the week ended September 14, the lowest level since the middle of May, the Labor Department said on Thursday.
Economists polled by Reuters had forecast 230,000 claims for the latest week.
Unadjusted claims increased by 6,436 to 184,845 last week, amid notable rises in California, Texas and New York, which more than offset a decrease of 2,055 in Massachusetts.
The US labour market has cooled considerably, with a big step-down in hiring and a decrease in job openings, which has raised concerns of a deterioration in conditions that could undermine the economic expansion.
Layoffs, however, remain low, which is helping to prop up the economy, through solid consumer spending.
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