The US Labor Department reported a decrease in weekly jobless claims, indicating a slight improvement in the labor market despite persistently low employment opportunities.
For the week ending August 24, initial claims for unemployment benefits fell by 2,000 to a seasonally adjusted 231,000, slightly above economists’ forecasts. Claims had previously increased by 5,000, to 233,000.
The decrease in jobless claims contrasts with an increase in continuing claims, which rose by 13,000 to 1.868 million in the week ending August 17. This increase suggests that some people will be unemployed for an extended period of time. The overall labor market remains subdued, with the unemployment rate expected to remain at 4.3% or fall slightly to 4.2% by August.
In related economic news, the US economy grew at a revised annualized rate of 3.0% in the second quarter of 2024, up from the initial estimate of 2.8%. This upward revision reflects stronger-than-expected consumer spending, which increased by 2.9%, exceeding the previous estimate of 2.3%. Corporate profits also recovered, increasing by $57.6 billion after falling in the first quarter.
The Federal Reserve is expected to consider rate cuts in the coming months as the labor market cools and inflation falls. Following a series of rate hikes in 2022 and 2023, the central bank has maintained its policy rate at 5.25%-5.50% for more than a year.
Despite improved GDP growth, the labor market’s slowdown and rise in continuing claims indicate ongoing challenges. Analysts and economists are closely monitoring these developments as the Federal Reserve considers loosening monetary policy to boost economic growth.
Stocks are expected to open higher, and the yield on the 10-year Treasury note increased to 3.87% following the latest economic data.
With input from Reuters and Market Watch.
