US initial jobless claims fell 33,000 to 231,000 for the week ended September 13, reversing part of the previous week’s surge, which was largely driven by Texas’ surge in identity fraud attempts after the Labor Day holiday. While layoffs remained low, the labor market was clearly soft as both demand and supply of workers were tight.
Jerome Powell described the situation as a “strange balance” with demand for workers weakened, partly due to uncertainty over import tariffs, while supply was hurt by a crackdown on immigration. The unemployment rate is now around 4.3% (a nearly 4-year high), and the government said payrolls may have added 911,000 jobs in the 12 months through March.
The Fed earlier Thursday decided to cut its benchmark interest rate by 25 basis points to 4.00%–4.25% and expects the pace of cuts to continue through 2025, after a pause in January due to uncertainty about the inflationary impact of import tariffs. The move is intended to support a slowing labor market.
Hiring momentum remains weak with nonfarm payrolls increasing by just 22,000 in August (3-month average of 29,000). The number of people receiving extended benefits fell slightly to 1.920 million, but the average length of unemployment rose to 24.5 weeks. This suggests that those who lost their jobs are taking longer to find new ones.
