Initial filings for unemployment benefits were roughly flat last week, reflecting a labor market that is cooling but not rapidly deteriorating as the employment outlook remains in focus ahead of Federal Reserve Chair Jerome Powell’s Friday speech in Jackson Hole, Wyo.
New data from the Department of Labor released Thursday showed 232,000 initial jobless claims filed in the week ending Aug. 17, up from 228,000 the week prior and in line with economists’ expectations.
Continuing jobless claims rose again to 1.86 million, the highest level since November 2021.
“Claims appear to be leveling off on a trend basis,” Oxford Economics senior economist Nancy Vanden Houten wrote in a note to clients on Thursday. “There is nothing in the claims data to change our view that, while the labor market is softening, it isn’t weak enough to warrant anything more than a 25bps rate cut at the Fed’s September meeting.”
Oliver Allen, senior economist at Pantheon Macroeconomics, added in a client note on Thursday: “Underlying claims have plateaued, and will probably slip back in the near term.”
As of Thursday afternoon, markets were fully pricing in an interest rate cut from the Fed by the end of September, with a roughly 25% chance the Fed cuts interest rates by 50 basis points, per the CME FedWatch Tool.
Deutsche Bank senior US economist Brett Ryan reasoned the case for a 50 basis point interest rate cut is more likely to be settled when the August jobs report is released on Sept. 6, not during Powell’s Friday speech.
“The committee wants to be very much data dependent and doesn’t feel that it wants to outline a preset course here,” Ryan argued. “So there isn’t much he could say.”
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