Initial claims for jobless benefits fell by 17,000 last week, a small but positive sign for overall employment levels amid resurfacing fears of a U.S. economic recession.
The Labor Department said Thursday that jobless claims for the week ending Aug. 3 fell to 233,000 from 250,000 the previous week.
The four-week moving average increased by 2,500 cases to 240,750. The previous week’s average was revised upward by 250 cases to 238,250.
The unemployment rate rose in July to its highest level since October 2021, rising to 4.3% from 4.1% in June. The economy added 114,000 jobs in July, the second time the payroll numbers have been revised down in June, following downward revisions in April and May.
The 0.2 percentage point increase in the unemployment rate triggered a recession indicator called the Samrule, which predicts that the U.S. economy has entered a recession when the three-month average of the unemployment rate rises 0.5 percentage points from its 12-month low.
The Federal Reserve is widely expected to begin cutting interest rates at its next rate-setting committee meeting in September, with a 57.5% chance of a half-percentage point cut and a 42.5% chance of a quarter-percentage point cut, according to forecasting algorithm CME Fed Watch.
The interest rate cuts are aimed at stimulating investment, hiring and growth amid a slowing economy, ultimately preventing unemployment from rising.
Federal Reserve Chairman Jerome Powell told Congress last month that the central bank is no longer just wary of rising inflation but also of worsening working conditions.
“I fully understand that we face risks on two sides right now,” Powell told the Senate Banking Committee in July.
