On Thursday, data released by the U.S. Department of Labor showed that for the week ending August 19, the number of initial claims for unemployment benefits, adjusted for seasonal fluctuations, decreased by 10,000 to 230,000, lower than economists' general expectation of 240,000. The number of initial claims from the previous week was revised up by 1,000. The number of continued claims for benefits for the week ending August 12 decreased by 9,000 to 1.702 million. By historical standards, the number of continued unemployment claims remains low, indicating that the U.S. job market is still strong.
Since the Federal Reserve started raising interest rates in March 2022, economists have been predicting a downturn in the U.S. labor market. In particular, following the collapse of Yellow Truck Company, which employs about 30,000 people, some economists expected a significant increase in the number of unemployment claims.
However, influenced by factors such as companies "hoarding" employees after struggling to recruit suitable workers during the COVID-19 pandemic, the expected downturn in the labor market has not materialized. The strong labor market and persistently high inflationary pressures have not only boosted some institutions and market participants' optimism about the prospects for U.S. economic growth but also stimulated financial markets' expectations for further interest rate hikes by the Federal Reserve.
Bill Adams, Chief Economist at United Commercial Bank, stated in a report that although there was a rise in unemployment claims at the end of last year and the beginning of this year, they have returned to a steady downward trend this summer. The significant changes in unemployment data over six months demonstrate the resilience of the U.S. job market since the outbreak of COVID-19.
Another report released by the U.S. Department of Commerce on Thursday indicates that orders for major U.S. manufactured capital goods slightly increased in July, suggesting that corporate equipment spending could continue to grow after rebounding in the second quarter. Orders for non-defense capital goods excluding aircraft (a measure of business spending) increased by 0.1%. However, shipments of core capital goods decreased by 0.2%, and shipments of non-defense capital goods including aircraft fell by 1.1%.
A slowdown in inflation and a resilient job market have led many economists to raise their GDP growth forecasts for the end of this year through 2024. The U.S. government's GDP assessment report shows that the government expects the annualized GDP growth rate for the second quarter to be 2.4%, higher than previous estimates made amid concerns about the impact of rising interest rates on the economy.
