U.S. Initial Jobless Claims Fall to 196,000, Back Below 200,000

New applications for U.S. unemployment benefits fell back below 200,000 last week, adding another low reading to a recent run that has shown limited layoff pressure across the labor market.

Seasonally adjusted initial claims totaled 196,000 in the week ended September 12, down 10,000 from the previous week’s unrevised 206,000, according to the Labor Department. The four-week moving average, which smooths some of the volatility in the weekly series, declined by 2,750 to 203,250 from an unrevised 206,000.

The decline does not mark a new low for the year. The Labor Department initially reported 187,000 claims for the week ended July 18, a figure that was subsequently revised to 188,000. Even so, the latest reading moves claims back under the 200,000 threshold after several weeks clustered just above it.

Continuing claims also moved lower

The Labor Department’s weekly unemployment insurance report also showed a decline in the number of people continuing to receive benefits. Seasonally adjusted insured unemployment fell by 39,000 to 1.730 million in the week ended September 5. The previous week’s level was revised down by 5,000 to 1.769 million from the initially reported 1.774 million.

The insured unemployment rate declined to 1.1% from 1.2%. The four-week moving average for continuing claims fell to about 1.761 million. Because continuing claims are reported with a one-week lag, they cover a different reference period from the headline initial-claims figure.

Initial and continuing claims answer related but different questions. Initial claims count new applications for unemployment insurance and therefore provide a timely read on layoffs. Continuing claims measure people who remain on benefits after filing an initial claim, so they can provide information about how long displaced workers are staying in the unemployment insurance system. Neither series directly measures hiring.

That distinction is important in the current labor market. A low number of new claims indicates that employers are not cutting payrolls broadly enough to produce a large flow of new unemployment filings. It does not by itself establish that companies are adding workers rapidly, that job openings are rising or that people who are already unemployed are finding jobs quickly.

Claims have stayed near the low end of their recent range

Recent Labor Department releases show how tightly the headline series has been grouped. Initial claims were 199,000 for the week ended August 1, then 209,000 for August 8, 206,000 for August 15 and 203,000 for August 22. The figure was 206,000 for August 29 and again 206,000 for September 5 before falling to 196,000 in the latest week.

The four-week average tells a similar story. It stood at 198,750 for the week ended August 1, rose as higher readings entered the calculation, and reached 207,250 for the week ended August 29. It then slipped to 206,000 in the week ended September 5 and to 203,250 in the latest report. That path points to some week-to-week movement but no sustained surge in new unemployment claims.

The latest weekly data arrive against a broader employment picture that has been less uniform. The Bureau of Labor Statistics reported that nonfarm payrolls increased by 162,000 in August, while the unemployment rate held at 4.1%. August’s payroll gain was well above the average monthly increase of 31,000 over the previous 12 months, according to BLS.

Revisions also changed the picture for the preceding two months. June payroll growth was revised to 31,000 from 20,000, while July was revised to a gain of 21,000 from an initially reported decline of 23,000. Taken together, the revised June and July figures were 55,000 higher than previously reported. The monthly employment report and the weekly claims series measure different parts of the labor market, so the claims decline is better read as evidence about layoffs than as a substitute for payroll growth.

The report follows the Federal Reserve’s rate increase

The claims release came one day after the Federal Reserve raised its target range for the federal funds rate by a quarter percentage point to 3.75% to 4.00%. In its September 16 statement, the Federal Open Market Committee said job gains had kept pace with growth in the workforce and that the unemployment rate had changed little. The committee also said inflation remained elevated.

Weekly claims are among the most frequently updated measures of labor-market conditions, which makes them useful for tracking whether layoffs are beginning to rise between monthly employment reports. The latest figures do not show that kind of broad deterioration. New claims are below 200,000, the four-week average is just above 200,000, and continuing claims moved lower in the latest available week.

There are still limits to what can be concluded from one release. Claims can be affected by normal weekly variation, and the September 12 reference week followed the Labor Day holiday. More importantly, a stable layoff rate can coexist with slower hiring. The next major nationwide employment report is scheduled for October 2, when BLS is due to publish September payroll employment and unemployment data.

Until then, the weekly claims series provides the timelier signal on job losses. Thursday’s report shows that new unemployment filings moved down rather than up in mid-September, with both the latest weekly reading and its four-week average remaining near the low end of the range seen over the past several months.