New data on unemployment claims, released Thursday, suggests the labor market is stronger than previously anticipated.
Initial unemployment claims for the week ending August 3 totaled 233,000, below the 240,000 forecasted by economists surveyed by the Wall Street Journal and Dow Jones Newswires. The prior week’s claims were revised up to 250,000, a change attributed by some economists to weather conditions and seasonal auto plant shutdowns.
“If you’re seeking evidence of further weakness in the labor market, you’ll have to look elsewhere,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Economists Predict Slowdown, Not Recession
Last week’s jobless claims report, alongside other data indicating a potential slowdown in hiring by employers, contributed to a market selloff.
U.S. stocks rose in early trading on Thursday following the release of the jobless claims data. Investors were closely monitoring these claims for signs of a weakening labor market, which could prompt the Federal Reserve to reduce interest rates more quickly or aggressively than anticipated to stave off a recession.
“To us, the data suggest we’re on track for a cooldown—not a recession,” wrote Oren Klachkin, financial market economist at Nationwide.
The robust job market has supported economic growth over the past two years, helping the U.S. avoid a recession that many economists predicted for 2023.
Despite the better-than-expected results, the data still indicated a slowing job market, with the number of continued claims for benefits rising during the week.
“The increase is also consistent with a labor market where hiring has slowed and unemployed individuals are finding it more difficult to find new jobs,” said Nancy Vanden Houten, senior economist at Oxford Economics.
