The number of Americans filing for unemployment benefits fell last week, a sign the labor market was holding firm despite tensions between the United States and its trading partners that have led to tit-for-tat tariffs.
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 210,000 for the week ended Aug. 18, the Labor Department said on Thursday.
It was the third straight week of declines for claims, which have dropped so low that economists have scrambled for explanations. In July, claims fell to their lowest level since 1969 even though the workforce is much larger than in prior decades.
Economists polled by Reuters ahead of Thursday’s report had forecast claims rising to 215,000 in the latest week.
“At this rate, we will be talking about a new low again pretty soon,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
Prices of longer-dated U.S. Treasuries were trading slightly higher while U.S. stock prices were mixed. The dollar was stronger against a basket of currencies.
A separate report from the Commerce Department showing a fall in sales of new homes gave fresh indications of a cooling U.S. housing market.
But the strength in the U.S. labor market has been a key reason behind the Federal Reserve’s ongoing campaign to raise interest rates.
Minutes of the U.S. central bank’s last policy meeting, published on Wednesday, showed officials discussed raising rates soon to counter excessive economic strength, although policymakers also examined how global trade disputes could batter businesses and households.
The Fed has already raised rates twice this year and is widely expected to do so again in September.
The claims data is being closely watched for signs of layoffs as a result of the Trump administration’s protectionist trade policy, which has led to an escalating trade war with China and tit-for-tat import tariffs with trading partners, including the European Union, Canada and Mexico.
While there have been reports of some companies either laying off workers or planning to as a result of the import duties, that is not yet evident in the claims data.
Thursday’s claims report showed “no sign of disruption in the U.S. economy despite recent trade policy tensions,” said Jesse Edgerton, an economist with J.P. Morgan.
Economists say a robust economy is helping the labor market weather the trade storm.
The Labor Department said data for Maine were estimated in the latest week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, dropped 1,750 last week to 213,750.
The claims report also showed the number of people receiving benefits after an initial week of aid dropped 2,000 to 1.73 million for the week ended Aug. 11. The four-week moving average of the so-called continuing claims fell 5,000 to 1.74 million.
© 2023 Thomson/Reuters. All rights reserved.