The decline in jobless claims has come as a surprise to economists who were looking for an increase
The monthly average of claims, considered to be a measure that gives a more accurate picture, decreased by 1,750 to 213,750. There was a similar decline in the number of job-seekers who discontinued receiving benefits after the first week of enrolment. At 1.73 million, the total number of people who continue to receive unemployment benefits remained broadly unchanged. The overall improvement is reflective of the sharp decline in the rate of layoffs in the US private sector.
RELATED: Labor market continues to fuel growth
Earlier, claims dropped to a near-50-year low in July, in a sign that the labor market is firming up, despite more people joining the workforce over the years. However, experts believe the trend will not be sustained if businesses come under pressure from the government’s new trade policy, which has caused hostility between Washington and its leading trade partners, including China and the European Union.
While strong hiring by employers has brought the economy closer to full employment, the central bank is likely to take a more aggressive stance with regard to the rate hike. Though a proportionate growth in wages could add to the case for monetary tightening, concerns over the commercial impact of the trade disputes may act as a deterrent. And, that will be enough reason for the Federal Reserve to stick to the current schedule and go for the third hike of the year in September.