Unemployment Claims Rise Less Than Expected After Fed Rate Cut
As the Federal Reserve made its first interest rate cut in over four years, the number of Americans filing for first-time unemployment benefits rose by less than anticipated last week. This suggests that the US labor market remains relatively healthy despite economic concerns.
In the week ending on Sept. 14, new jobless claims in the US climbed to 219,000, compared to the previous week's 231,000. Economists had predicted a consensus figure of 230,000, showing a slightly better outcome.
Additionally, the number of people receiving benefits after their initial week of aid decreased by 14,000 to 1.829 million, indicating some stability in the job market.
The Federal Reserve's rate cut of 50 basis points, bringing the range to 4.75% to 5%, was aimed at addressing potential risks of higher inflation and labor market weakness. Fed Chair Jerome Powell mentioned that further rate cuts may be necessary to combat inflation, but the bank is not looking to return to ultra-low rates seen during the pandemic.
Traders are now predicting a 67% chance of another 25 basis point rate cut at the Fed's November meeting, based on the CME Group's FedWatch tool. Analysts at JPMorgan anticipate a 50 basis point cut at the next meeting, depending on upcoming jobs reports.
Overall, the labor market's performance will play a crucial role in determining future rate cuts. If job growth remains steady, the path is clear for a gradual return to neutral rates. However, any softening in labor data could lead to more significant rate cuts in the coming months. It is important for investors and individuals to stay informed about these developments as they can have a direct impact on their finances and the overall economy.