Augmenting the positive momentum in the labor market, the number of Americans filing for unemployment benefit dropped further last week. The downtrend, which continued for the third consecutive week now, has come as a surprise to economists who were looking for an increase.
A report published by the Labor Department Thursday showed that around 210,000 persons filed for new jobless claims during the seven-day period ended August 18 – adjusted for seasonal factors – which is lower by 2,000 compared to the preceding week. The outcome defied the widespread concerns that trade-related challenges could impact the employment market.
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.
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.