October 3, 2022

Jobless claims fall as Fed looks to cool job market

Jobless claims fall as Fed looks to cool job market

Initial filings for unemployment benefits fell slightly last week although they were consistent with a higher skew in layoffs that began in the spring, The Ministry of Labor said Thursday.

Jobless claims totaled 250,000 for the week ending August 13, down 2,000 from the previous week and less than 260,000 from the Dow Jones estimates.

The four-week moving average of claims, which helps smooth weekly volatility, also fell by 2,750 to 246.750.

Earlier this year, claims reached their lowest level in more than 50 years, but began to rise in April after reaching 166 thousand. The four-week moving average rose over that period by nearly 80,000.

Continuing claims, which came a week behind the headline figure, totaled 1.437 million, an increase of 7,000.

Policy makers are watching the job market closely at a time when inflation is approaching its highest level in 40 years. Federal Reserve officials have begun a series of interest rate increases aimed in part at cooling a labor market where there are two jobs available for every available worker.

At the July meeting, Federal Reserve officials noted “tentative signs of a weakening labor market outlook” that included a rise in weekly claims, according to the Minute released Wednesday. Policy makers said they are determined to keep raising interest rates until inflation is brought under control even if it means a further slowdown in employment.

“Unfortunately, what is good for the American worker is bad for the Fed trying to bring inflation back to 2% and that will complicate their work and cause them to raise rates higher and for longer than many people currently expect,” said Chris Zaccarelli. Chief Investment Officer for the Independent Investor Alliance.

In other economic news Thursday, The Federal Reserve Bank of Philadelphia reported That August’s monthly manufacturing survey rose to a reading of 6.2, which is the percentage difference between companies expecting expansion versus contraction. That was an improvement from minus 12.3 in July.

The level was above the estimate of -5 and helped calm fears that manufacturing could be heading for a significant slowdown. A similar survey on Monday from the Federal Reserve in New York fell by 40 points as pollsters pointed to deteriorating business conditions.

Indices of prices paid and received both declined during the month, although they remained in the zone indicating that inflation is still present. Employment also improved as did new orders, although the latter still posted a reading of minus 5.1.