The American job market remains resilient despite facing high interest rates, as the number of individuals applying for unemployment benefits dropped last week. According to the Labor Department, jobless claims fell by 7,000 to 227,000, with the four-week average also decreasing by 4,500 to 236,500.
In the week ending on August 3, 1.86 million Americans were collecting jobless benefits, marking a decline of 7,000 from the previous week. Although weekly filings for unemployment benefits have been on the rise since May, they still remain low compared to historical standards.
The Federal Reserve has been combating high inflation rates, which peaked at a four-decade high just over two years ago. Despite raising the benchmark interest rate 11 times in 2022 and 2023, inflation has gradually decreased to a three-year low of 2.9% last month. However, the impact of higher borrowing costs is beginning to show in the job market.
In July, employers added only 114,000 jobs, significantly lower than the monthly average of nearly 218,000 from January to June. The unemployment rate also increased for the fourth consecutive month in July, although it remains relatively low at 4.3%. Additionally, monthly job openings have been declining since reaching a record high of 12.2 million in March 2022, dropping to 8.2 million in June.
With signs of an economic slowdown and inflation approaching the Fed’s 2% target, it is expected that the Fed will begin cutting rates at its next meeting in September. Despite these challenges, the U.S. job market continues to persevere.
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