The initial US unemployment claim unexpectedly fell to 196,000, and the labor market continues to send a signal of stability

The Zhitong Finance App learned that there was an unexpected drop in the number of jobless claims in the US at the beginning of last week. The US Department of Labor said on Thursday that for the week ending September 12, the number of first-time state jobless claims fell by 10,000 to 196,000 after seasonal adjustments. The economists in the market survey had previously expected 208,000. The number of initial jobless claims fell to its lowest level since July, while the number of renewed jobless claims fell to a low of more than two years, further sending a signal of stability in the labor market.

The decline in initial applications may reflect seasonal fluctuations associated with Labor Day and the school season. Before and after mobile public holidays, initial request data is difficult to adjust seasonally. The underlying trend is still consistent with a return to stability in the labor market after much of the summer turmoil.

The initial request data covers the week the government surveyed employers for the non-farm payrolls section of the September employment report. The number of non-farm payrolls increased by 162,000 in August, and employment growth slowed sharply in the previous three months.

In the week ending September 5, the number of renewed jobless claims fell by 39,000 to 1.73 million, the lowest since 2024. Renewal data is often viewed as an alternative measure of recruitment.

The stability of the labor market is mainly due to the low number of layoffs. The broader trend is still prominent. With the exception of a few high-profile layoffs announcements, the level of layoffs across the economy is still sluggish.

Economists said that in the face of headwinds, companies are still unwilling to increase recruitment efforts. These headwinds include the war between the US, Israel, and Iran, which is driving up oil prices and increasing inflation.

Analyst Eliza Winger said, “Initial data continues to show that there is little pressure to lay off workers, but further tightening of the Federal Reserve's policy may weaken the otherwise stable labor market.”

Despite limited layoffs, Americans are still unwilling to leave their jobs against the backdrop of uneven recruitment, further strengthening the labor market pattern of “low recruitment and low dismissal.”

Unseasonally adjusted, initial jobless claims fell sharply, mainly driven by declines in California, Texas, Michigan, and New York.

The Federal Reserve raised interest rates for the first time since July 2023 on Wednesday, raising the overnight benchmark interest rate by 25 basis points to the 3.75%-4.00% range, and hinting that borrowing costs will rise further in the next few months.

Federal Reserve Chairman Kevin Walsh specifically pointed out that the labor market is “a basic strong signal,” adding that policymakers believe “the unemployment rate is basically consistent with full employment.”