Labor Market Remains Tight as Initial Claims Fall Again

Initial claims for regular state unemployment insurance fell by 16,000 for the week ending September 24^th, coming in at 193,000. The previous week’s 209,000 was revised down from the initial tally of 213,000 (see first chart). Claims have fallen for six of the last seven weeks and are at their lowest level since April 23^rd. When measured as a percentage of nonfarm payrolls, claims came in at 0.160 percent for the month of August, down from 0.171 in July but still above the record low of 0.117 in March (see second chart).

The four-week average fell to 207,000, down 8,750 from the prior week. After showing a sustained upward trend since a recent low in early April, the four-week average rose from April through mid-August but has started to trend lower again. Overall, the data continue to suggest a tight labor market. However, continued elevated rates of price increases, an aggressive Fed tightening cycle, and fallout from the Russian invasion of Ukraine represent risks to the economic outlook.

The number of ongoing claims for state unemployment programs totaled 1.276 million for the week ending September 10^th, a rise of 6,029 from the prior week (see third chart). State continuing claims have held relatively steady in recent weeks (see third chart).

The latest results for the combined Federal and state programs put the total number of people claiming benefits in all unemployment programs at 1.302 million for the week ended September 10^th, an increase of 6,855 from the prior week. The latest result is the thirty-first week in a row below 2 million.

The overall low level of claims combined with the high number of open jobs suggests the labor market remains strong. The tight labor market is a crucial component of the economy, providing support for consumer spending. However, aggressive Fed policy raises borrowing costs for consumers and businesses and doubts about future demand. The outlook remains highly uncertain.