The number of Americans filing first-time claims for unemployment benefits fell to 222,000 last week, the Labor Department reported on Thursday.
The reading was below expectations of 240,000 and compares with last week’s revised 228,000.
The four-week moving average was 233,000, a decrease of 7,500 from the prior period.
The weekly number suggests the labor market remains strong, although the monthly jobs report for August reported last week did see a drop in new jobs from July’s 526,000 to 315,000. Still, there are nearly two jobs available for every available worker.
The strength of the job market is a key element in the Federal Reserve’s calculation of how much to raise interest rates at its meeting later this month. Analysts expect the central bank to hike interest rates by 75 basis points following similar increases in June and July.
Political Cartoons on the Economy
The Fed is committed to tackling inflation, now running at 8.5% annually and well above its stated goal of 2% annual average. There are signs that some items that were seeing runaway prices, like gasoline and construction materials, have receded, but other areas of the economy like housing and hospitality have seen increased costs.
On Wednesday, the Fed released its “beige book” survey of economic conditions from its 12 districts and found that the economy remained evenly split between respondents who said it was growing modestly and those who said it was slowing a bit.
But it noted a change in consumer behavior as shoppers dealt with rising prices.
“Most Districts reported steady consumer spending as households continued to trade down and to shift spending away from discretionary goods and toward food and other essential items,” the report said.
While the U.S. economy may flirt with recession, or even avoid it with a soft landing that allows slow growth without a downturn, the situation in Europe is worsening because of an energy crisis brought on by Russia’s invasion of Ukraine.
New British Prime Minister Liz Truss on Thursday announced a cap on energy prices to deal with the soaring cost that consumers are facing. Other countries in Europe have announced plans to curb energy usage and improve supplies. Europe is facing a shortage of natural gas due to Russia’s shutdown of pipelines carrying its gas across the continent.
By contrast, energy prices have been falling in the U.S. with the price of a gallon of regular gas now averaging $3.751, down more than a dollar from its peak of around $5 a gallon in June.