US jobless claims tick up, existing home sales rise
WASHINGTON: The number of Americans filing new applications for unemployment benefits ticked up in the latest week, but appeared to be steadying near a level consistent with a gradual cooling of the labor market that should set the stage for the Federal Reserve to kick off interest rate cuts next month.
TYSONS, US: A shopper walks past a hiring sign displayed in front of Abercrombie & Fitch at the Tysons Corner Center mall on August 22, 2024 in Alexandria, Virginia.. -- AFP.
A slowdown in overall US business activity this month as firms faced diminished ability to push through price increases added to the evidence that the economy is slowing and inflation is downshifting to a degree that should allow Fed officials to focus more attention on the job market. With a rate cut now broadly expected next month, interest rates on home loans have already begun dropping, and that helped fuel a larger-than-expected rebound in existing home sales last month.
Meanwhile, US existing home sales rose more than expected in July, reversing four consecutive monthly declines, as improving supply and declining mortgage rates offered hope that activity could rebound in the months ahead. Home sales rose 1.3 percent last month to a seasonally adjusted annual rate of 3.95 million units, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales would edge up to a rate of 3.93 million units.
Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 232,000 for the week ended Aug. 17, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week. The latest data should continue to allay fears that the labor market is rapidly deteriorating, first raised after a sharper-than-expected slowdown in job growth in July, which also saw the unemployment rate rise to a post-pandemic high of 4.3 percent.
Indeed, the latest claims data covers the survey week for this month’s employment report from the Labor Department, and the leveling off in new filings points to “a small decline in the unemployment rate in August,” Nancy Vanden Houten, lead US economist at Oxford Economics, said in a client note. “Claims are leveling off on a trend basis, consistent with our view that, while the labor market is softening, it isn’t weak enough to warrant anything more than a 25 (basis point) rate cut at the Fed’s September meeting,” she said. Fed officials have said they are keenly watching the labor market, aware that waiting too long to cut interest rates could cause serious harm.
Layoffs remain historically low, however, with much of the slowdown in the labor market coming from firms scaling back hiring, trailing an immigration-induced surge in labor supply. The Fed’s 525 basis points worth of rate hikes in 2022 and 2023 are curbing demand.
The US central bank has kept its benchmark overnight interest rate in the current 5.25 percent-5.50 percent range for more than a year. With a first rate cut now widely expected at its Sept. 17-18 policy meeting, the market focus is on how large a reduction it will be - a quarter or a half percentage point. The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 4,000 to a seasonally adjusted 1.863 million during the week ending Aug 10, the claims report showed.
The report on business activity also pointed to an orderly cooling in the economy. S&P Global said on Thursday that its flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, edged down to 54.1 this month, a four-month low but still healthy level among the highest measured over the past two years. — Reuters.
