Jobless claims drop to 8-week low. Hiring has slowed, but layoffs aren't rising.

By Jeffry Bartash

Most businesses are reluctant to cut jobs

The numbers: The number of Americans who applied for unemployment benefits last week fell slightly to 227,000 and touched an eight-week low, reinforcing the view that companies are reluctant to lay off workers even as they clamp down on new hiring.

New claims declined by 5,000 in the seven days that ended Aug. 31 from 232,000 in the prior week, the government said Thursday. It's the lowest level since early July.

Economists polled by the Wall Street Journal had forecast new claims to total 225,000, based on seasonally adjusted figures.

Companies are reluctant to fire workers in light of a chronic labor shortage and the prospect of an improving economy after the Federal Reserve begins to cut interest rates. The Fed is expected to lower borrowing costs starting at their next meeting in two weeks.

Key details: The number of new claims looked even better based on actual filings - that is, before seasonal adjustments.

Raw claims slid to 189,389 last week from 192,741 two weeks ago - the fewest since last October. It's quite uncommon for actual claims to be that low.

New jobless claims fell in 31 of the 53 states and territories that report these figures to the federal government. New claims rose in 22 others. Most changes were small.

The number of people already collecting unemployment benefits in the U.S., meanwhile, fell by 22,000 to 1.84 million, the government said.

Still, a gradual increase in these so-called continuing claims this year offers the clearest evidence that new jobs are harder to find.

Big picture: Job openings have tumbled and companies are filling fewer positions, but most people who want a job have one and unemployment is still low. That could help the economy stave off a recession, especially with the Fed ready to cut interest rates.

Looking ahead: "Initial claims for unemployment insurance benefits continue to signal that layoffs are not the primary catalyst for the softening in the labor market," said chief economist Ryan Sweet of Oxford Economics. "However, the Federal Reserve can't be complacent, and the central bank needs to begin cutting interest rates."

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX opened mixed in Thursday trading.

-Jeffry Bartash

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09-05-24 0956ET

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