New claims for unemployment benefits in the US fell to 218,000 in the week ended September 20, lower than market expectations. However, the labor market remains weak due to the slow pace of hiring and uncertainty due to protectionist trade policies.
Job growth has remained sluggish with an average of just 29,000 new jobs per month in the past three months, compared to more than 80,000 a year ago. Other factors such as immigration restrictions have also limited the supply of labor, contributing to the slowdown in the labor market.
The Fed last week cut interest rates by 25 basis points to 4.00%-4.25% after holding off on easing since January due to concerns about inflation from import tariffs. Powell warned that the Fed now faces the risk of still-high inflation and a weakening labor market.
Continuing claims, a proxy for hiring, fell slightly to 1.926 million, but the average length of unemployment rose to 24.5 weeks, the highest since 2022. The unemployment rate in August rose to 4.3%, near a four-year high.
