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The number of Americans filing new applications for unemployment benefits fell last week, but the labor market has lost its luster amid an anemic pace of hiring.
Initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 218,000 for the week ended September 20, the Labor Department said on Thursday. Economists polled by Reuters had forecast 235,000 claims for the latest week.Â
Though businesses are hoarding workers, they have remained reluctant to increase headcount as they navigate uncertainty wrought by a protectionist trade policy, which boosted the nation’s average tariff rate to its highest level in a century.
The lackluster demand for workers has eroded the labor market’s resilience, prompting the Federal Reserve to resume cutting interest rates last week. An immigration crackdown has also cut labor supply, contributing to holding back job growth.
Nonfarm payrolls gains averaged only 29,000 jobs per month in the three months to August compared to 82,000 during the same period last year, posing a conundrum for U.S. central bank officials who are also keeping an eye on inflation.Â
Fed Chair Jerome Powell said on Tuesday that “near-term risks to inflation are tilted to the upside and risks to employment to the downside – a challenging situation.”
The central bank last week cut its benchmark overnight interest rate by 25 basis points to the 4.00%-4.25% range. The Fed paused its policy easing cycle in January because of uncertainty over the inflationary impact of President Donald Trump’s broad import tariffs.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, slipped 2,000 to a seasonally adjusted 1.926 million during the week ending September 13, the claims report showed.Â
The elevation in the so-called continuing claims is consistent with more out of work people experiencing long bouts of unemployment. The average duration of unemployment rose to 24.5 weeks in August, the longest since April 2022, from 24.1 in July.
The so-called continuing claims covered the period during which the government surveyed households for September’s unemployment rate. The jobless rate increased to near a four-year high of 4.3% in August.Â
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
