US jobless claims fall to two-month low; layoffs remain strong

The number of Americans filing for unemployment benefits fell to a two-month low last week, a sign that layoffs remain relatively low despite other signs of a cooling labor market.

Weekly claims fell 5,000 to 227,000 for the week ending Aug. 31, the Labor Department reported Thursday. That’s the fewest since the week of July 6, when 223,000 Americans filed for the aid. It’s also fewer than the 230,000 new claims analysts had expected.

The four-week average, which smooths out weekly ups and downs, fell 1,750 to 230,000. It was the lowest four-week average since early June.

Weekly applications for unemployment benefits, a proxy for layoffs, remain low by historical standards, although they are up from those reported earlier this year.

For the first four months of 2024, claims averaged a record low of 213,000 a week. But they began to rise in May, reaching 250,000 by the end of July and adding to evidence that high interest rates were finally cooling a busy U.S. labor market.

Employers added just 114,000 jobs in July, well below the January-June monthly average of nearly 218,000. The unemployment rate rose for the fourth straight month in July, though it remains relatively low at 4.3%.

Economists polled by FactSet expect Friday’s August jobs report to show the U.S. added 160,000 jobs, up from 114,000 in July, and the unemployment rate fell to 4.2% from 4.3%.

The strength or weakness of the report will likely influence the Federal Reserve’s plans for how much to cut its benchmark interest rate.

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