Jobless Claims Rose Slightly. Here’s Why It Won’t Move the Unemployment Rate Much

Initial jobless claims increased last week but point to a lower unemployment rate in August. 

First-time claims for unemployment insurance for the week ending Aug. 17 came in at 232,000, according to data from the Labor Department. Claims rose by 4,000 from the prior week’s results, which were adjusted slightly higher. This week’s numbers were slightly above projections from economists surveyed by the Wall Street Journal and Dow Jones Newswires. 

The modest change in jobless levels likely won’t move the August unemployment rate much, showing the labor market is stabilizing, said Nancy Vanden Houten, senior economist at Oxford Economics. 

“Despite the rise in the latest week, claims appear to be leveling off on a trend basis,” Vanden Houten wrote. 

Labor Data in Focus

Market watchers are laser-focused on employment data since it could impact Federal Reserve officials, who are poised to act on interest rates.

A July jump in the unemployment rate to 4.3% raised concerns among some investors that the economy was weaker than previously thought, increasing the likelihood that the Fed would begin to cut interest rates at its next meeting in September.

Since then, weekly initial jobless claims have slowed, showing that the labor market is still resilient. Vanden Houten said stability in the job market could limit how aggressively the Fed may act in its next meeting. Some economists believe the central bank should make a more aggressive 50-basis-point cut instead of the quarter-point cut that most predict. 

“There is nothing in the claims data to change our view that, while the labor market is softening, it isn’t weak enough to warrant anything more than a 25bps rate cut at the Fed’s September meeting,” Vanden Houten wrote.

Correction, Aug. 22, 2024: A previous version of this article incorrectly stated the direction in which initial jobless claims moved. Initial jobless claims increased slightly in July.