America’s unemployment rate rose unexpectedly to 3.8 per cent, up from 3.5 per cent based on the latest labour report from the US Labor Department.
The report indicates that the rise in unemployment was driven by an increase in the labour force participation rate to the highest in more than three years. A separate report from the Labor Department showed the rebound in worker productivity in the second quarter was not as strong as initially reported but was still the strongest in nearly three years.
Nonfarm productivity – measuring hourly output per worker – increased at a 3.5 per cent annualised rate in the period from April through June – the highest since the third quarter of 2020 – versus a -1.2 per cent reading in the first three months of the year. Second-quarter productivity had initially been estimated at 3.7 per cent.
The report shows that labour costs, a key focus of the Federal Reserve, as it battles to bring inflation back down to its two per cent target, rose at a 2.2 per cent annualised rate, a somewhat faster pace than the 1.6 per cent rate initially reported. Nonetheless, the advance was still the slowest since the fourth quarter of 2021.
Unexpected fall in jobless benefits
The Labor Department is reporting that the number of Americans seeking jobless benefits for the first time fell unexpectedly last week to the lowest level since February. This latest information is pointing to a US job market that remains relatively tight even as other recent data indicate it has begun to soften.
Initial claims for state unemployment benefits fell 13,000 to 216,000 in the week ended September 2, 2023, from a revised 229,000 in the prior week. This was the lowest since the same level was touched in the week ended February 11 and it marked the fourth straight weekly decline.
Meanwhile, the rolls of those continuing to receive jobless benefits beyond the first week fell by 40,000 to 1.679 million in the week ended August 26 from a revised 1.719 million a week earlier, which is the lowest since the same level was hit in the week ended July 15. Overall, the jobless claims figures show the US job market appears in no danger of rolling over in the near term.
Last week, the department reported that job growth picked up in August, although employment gains reported in the previous two months were revised sharply lower in an indication that labor market conditions were loosening.
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