Weekly US jobless claims fell slightly By Reuters

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits fell last week, but re-employment opportunities for laid-off workers are becoming increasingly scarce, a sign that the jobless rate is likely to have remained elevated in August.

Initial claims for state jobless benefits fell by 2,000 to a seasonally adjusted 231,000 for the week ended Aug. 24, the Labor Department said Thursday. Economists polled by Reuters had estimated 232,000 claims for the past week.

The claims retreated from an 11-month high at the end of July as distortions from temporary shutdowns of auto plants to retool new models and the impact of Hurricane Beryl faded. They remain at levels consistent with a steadily cooling labor market, which should help ease fears of a rapid deterioration.

The Labor Department’s Bureau of Labor Statistics estimated last week that employment growth was overstated by 68,000 jobs per month in the 12 months through March. But most economists considered this so-called benchmark revision estimate to be misleading.

The baseline estimate is based on quarterly Census of Labor and Wages data derived from employer reports to state unemployment insurance programs. The data does not include undocumented immigrants, a group that economists believe contributed to strong job growth last year.

“The BLS revisions likely overrevised the data because the revision is based on administrative data from unemployment insurance filings, which likely do not capture many of the increased jobs held by undocumented workers,” Morgan Stanley economists wrote in a note. note.

The slowdown in the labor market, characterized by a large reduction in hiring, has caught the attention of Federal Reserve officials. Fed Chairman Jerome Powell signaled last Friday that a rate cut was imminent, in a nod to labor market concerns.

Financial markets expect the US central bank to start its easing cycle next month with a 25 basis point cut in its overnight benchmark interest rate, although a half percentage point cut is on the table. The Fed has kept its policy rate in the current range of 5.25%-5.50% for more than a year, after raising it by 525 basis points in 2022 and 2023.

The number of people receiving benefits after an initial week of aid, a proxy for employment, rose by 13,000 to a seasonally adjusted 1.868 million in the week ended Aug. 17, the claims report showed. So-called continued claims are close to levels last seen at the end of 2021, indicating longer periods of unemployment.

The continuous claims data covered the period when the government surveyed households to determine the unemployment rate for August. Economists expect the jobless rate this month to either remain close to a three-year high of 4.3 percent or fall to 4.2 percent.

The unemployment rate has risen for four consecutive months, partly reflecting an increase in the labor supply induced by immigration.