US Jobless Claims Fall to 206,000 as Layoffs Stay Subdued

US initial jobless claims fell to 206,000 in the week through Aug. 15, easing after nearly a month of gains and landing below the 210,000 that economists surveyed by The Wall Street Journal had expected, Labor Department data showed Thursday.

The reading was 6,000 lower than the upwardly revised 212,000 reported a week earlier. The four-week moving average, which smooths weekly volatility, rose by 4,250 to 204,000, the department said.

Continuing claims, a proxy for the number of people still drawing unemployment benefits, climbed by 18,000 to 1.799 million in the week through Aug. 8. The four-week moving average for insured unemployment rose by 2,500 to 1.789 million, while the insured unemployment rate held at 1.2 percent.

The latest figures follow a stretch in which initial claims dipped to 189,000 in the week ended July 18, the lowest since 1969, before climbing for nearly a month. The pullback leaves applications at a subdued level historically, even as employers have been slow to both fire and hire this year — a dynamic that has kept the labor market steady for people with jobs but challenging for those trying to land one.

On an unadjusted basis, initial claims totaled 172,080 for the week, a decrease of 17,123 from the prior week. The largest increases came in Michigan, New York, Texas and South Carolina, with New York attributing the rise to layoffs in professional, scientific and technical services, construction, and health care and social assistance, the department said. The largest decreases were in Ohio, Iowa, Kentucky, Louisiana and North Dakota.

The data reinforce a picture of a labor market near equilibrium that policymakers have said is not a major source of inflation pressure. In July, the US economy lost 23,000 jobs against expectations of an 80,000 increase, while the unemployment rate fell to 4.1 percent from 4.2 percent in June. The insured unemployment rate, at 1.2 percent, remains near the lows of the past two decades, with the highest readings in New Jersey and Puerto Rico at 2.6 percent, followed by Rhode Island at 2.2 percent.

For the Federal Reserve, the combination of subdued layoffs and cooling hiring supports the case that the labor market is normalizing rather than deteriorating sharply. With initial claims running below the roughly 210,000 consensus and continuing claims edging higher, the data are unlikely to materially shift expectations for the central bank's next policy move, which markets will parse at the September meeting. The last time claims sat this low relative to the labor force, the Fed was in a tightening cycle it has since paused, leaving the path of rates dependent on whether hiring stabilizes or the unemployment rate resumes its climb.

The data come as the Fed weighs whether the labor market's gradual cooling warrants a shift in policy. With inflation having eased from its 2022 peak, officials have signaled that the balance of risks is tilting toward employment, making weekly claims a closely watched gauge ahead of the September meeting. A sustained rise in continuing claims toward 2 million would signal that laid-off workers are taking longer to find new jobs, a development that could accelerate the case for rate cuts.

This article is for informational purposes only and does not constitute investment advice.