Jobless claims rise and private employers slow down hiring in August

"The number of Americans filing new applications for unemployment benefits increased more than expected last week, while hiring by private employers slowed in August, offering further evidence that labor market conditions were softening. The reports were released a day after government data showed there were more unemployed people than positions available in July for the first time since the COVID-19 pandemic."

"The slackening labor market likely positions the Federal Reserve to resume cutting interest rates later this month, though much would depend on August's employment report to be published on Friday and consumer price data due next week. "We continue to see softness growing in the labor market as tariff policy uncertainty lingers, immigration changes take effect, and AI adoption grows," said Eric Teal, chief investment officer at Comerica Wealth Management."

Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 237,000 for the week ended August 30, above economists' forecast of 230,000. Hiring by private employers slowed in August and job growth has shifted to stall-speed, with more unemployed people than available positions in July for the first time since the COVID-19 pandemic. Economists cite sweeping import tariffs and an immigration crackdown as factors hampering hiring at construction sites and restaurants. Businesses remain reluctant to increase headcount amid protectionist trade policy and uncertainty, though layoffs remain relatively low. The slackening labor market increases the likelihood of Federal Reserve interest rate cuts, contingent on upcoming employment and consumer price data.

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