US Jobless Claims Edge Higher as Labor Market Remains Stable

The US labor market continued to show signs of stability last week, with unemployment benefit claims increasing only slightly as layoffs remained relatively low.

Initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted 206,000 in the week ending August 29, compared with economists' expectation of 205,000. The number of people continuing to receive unemployment benefits increased by 8,000 to 1.779 million in the week ending August 22.

Economists continued to describe the labor market as operating in a "slow hire, slow fire" environment. Data from Challenger, Gray & Christmas showed that planned job cuts by US-based companies rose 58% in August to 52,881. Despite the increase, August's total was the lowest for that month since 2022, while announced layoffs for the year so far were 41% lower than during the same period last year.

The Federal Reserve's Beige Book also pointed to limited employment growth in August, describing employment as having increased "very slightly." Healthy labor demand was reported most often in manufacturing, construction and some service industries, while retail and hospitality experienced weaker demand.

Attention was also focused on inflation. The Institute for Supply Management reported that its measure of prices paid by services companies for inputs climbed to 72.6 in August from 70.3 in July, reaching its highest level since August 2022. Economists said the increase indicated that inflationary pressure was extending beyond goods.

The ISM services survey also showed stronger business activity. New orders at services companies rose to 60.9, their highest level since February 2023, while the nonmanufacturing PMI increased to 55.4 from 54.1. A reading above 50 indicates expansion in the services sector.

The US Commerce Department data separately showed the trade deficit widening 24.4% to $88.6 billion in July. Imports increased 2.8% to $399.3 billion, while exports declined 2.1% to $310.7 billion.

The government was expected to release its monthly employment report on Friday, with economists surveyed by Reuters forecasting a gain of 56,000 nonfarm jobs in August and an unemployment rate of 4.1%.