Jobless Claims Fall to Five Month Low, Defying Fed’s Efforts to Cool Labor Market

There’s no sign that the labor market is cooling in today’s jobless claims figure.

Initial claims for state unemployment benefits fell by 16,000 to 193,000 in the week ended September 24, the Labor Department said Thursday.

That’s the lowest level of claims since late April. Economists had expected claims to rise after the very low 213,000 figure reported for the prior week.

Federal Reserve officials have said they are aiming to cool off the labor market by hiking rates, seeing that as a key part of their fight to tame inflation. So far, however, the labor market remains sizzlingly hot. The unemployment rate in August was 3.7 percent, a historically low number and below what most economists think is sustainable without inducing high inflation.

2/ If this sticks, it could result in further declines in the unemployment rate – i.e. the job market getting tighter again. pic.twitter.com/T8p3dTq0DS

— Guy Berger (@EconBerger) September 29, 2022

The extremely high demand for workers is all the more extraordinary because the economy has been contracting. In a separate report Thursday, the government said that Gross Domestic Income, a measure of overall economic growth, was lower than previously thought. Gross Domestic Product, the standard measure of the economy, contracted in the first half of the year and, by most estimates, it is barely growing in the third quarter.