WASHINGTON — The number of Americans filing for unemployment benefits last week fell to its lowest level since May despite repeated attempts by the Federal Reserve to cool the economy and bring inflation under control.
Applications for jobless aid for the week ending Sept. 3 fell by 6,000 to 222,000, the Labor Department reported Thursday. First-time applications generally reflect layoffs.
The four-week average for claims, which smooths out some of the weekly ups and downs, declined by 7,500 to 233,000.
The number of Americans collecting traditional unemployment benefits rose by 36,000 the week that ended Aug. 27, to 1.47 million.
Hiring in the U.S. in 2022 has been remarkably strong even as the country faces rising interest rates and weak economic growth. The Federal Reserve has aggressively raised interest rates in an effort to bring down inflation, which generally also slows job growth.
On Friday, the Labor Department reported that employers added 315,000 jobs in August, roughly what economists had expected, down from an average 487,000 a month over the past year. The unemployment rate reached 3.7%, its highest level since February. But it rose for a healthy reason: Hundreds of thousands of people returned to the job market, and some didn’t find work right away, which boosted the government’s count of unemployed people.
The U.S. economy has been puzzling so far this year. Economic growth fell the first half of 2022, which, by some informal definitions, signals a recession.
But businesses remain desperate to find workers, posting more than 11 million job openings in July, meaning there are nearly two job vacancies, on average, for every unemployed American.
Inflation continues to threaten both the global and U.S. economies. The rise in consumer prices slowed modestly from June to July, bur remains historically high enough that the Federal Reserve has indicated it will keep raising interest rates until prices retreat.
Analysts and economists are expecting the Fed to raise its benchmark borrowing rate by at least another half-point when it meets in two weeks.
The Fed has already raised its short-term interest rate four times this year and Chairman Jerome Powell has said that the central bank will likely need to keep interest rates high enough to slow the economy “for some time” in order to tame the worst inflation in 40 years. Powell has acknowledged the increases will hurt U.S. households and businesses, but also said the pain would be worse if inflation remained at current levels.
Some of that so-called pain has already begun, particularly in the housing and technology sectors. Online real estate companies RedFin and Compass have recently announced job cuts as rising interest rates have cooled red-hot a housing market.
Other high-profile layoffs have been announced in recent months by Tesla, Netflix, Carvana, and Coinbase.