US Unemployment Claims Hit Lowest Level in 7 Months

The American job market is still tight, at least according to one new measure.

Data released Thursday (Sept. 7) by the U.S. Labor Department showed the number of residents filing initial unemployment claims fell 13,000 to 216,000 for last week, the lowest level since Feb. 11 and the fourth weekly decline in a row.

Meanwhile, continuing claims, seen as a proxy for the number of people getting unemployment benefits, fell to 1.68 million for the week ended Aug. 26, their lowest level since July.

A report Thursday by Bloomberg News noted that while the job market may be softening, it has helped the economy, with continued hiring and lower layoff numbers keeping consumers spending.

“The claims data are a reminder that labor market conditions may be cooling, but that the labor market is still tight,” Nancy Vanden Houten, senior U.S. economist at Oxford Economics, said in a note quoted in that report.

However, there are signs of a slowdown on the horizon, as noted by PYMNTS on Wednesday (Sept. 6).

That’s when the Federal Reserve released its latest Beige Book, which showed that, across the dozen district banks surveyed, economic growth is seeing some headwinds, with several important qualitative indicators decelerating.

“Most Districts reported price growth slowed overall, decelerating faster in manufacturing and consumer-goods sectors … contacts in several Districts indicated input price growth slowed less than selling prices, as businesses struggled to pass along cost pressures,” the Fed reported. “As a result, profit margins reportedly fell in several Districts.”

As for the retailers, the Fed stated that retail spending “continued to slow, especially on non-essential items.” 

Consumers have apparently “exhausted their savings” and are relying on borrowing so that they can keep spending. News that followed federal data from earlier in the year showed American consumers’ savings peaked at $2 trillion and may run out as soon as this quarter.

Meanwhile — as PYMNTS Intelligence has shown — the environment of pinched margins may cause smaller businesses to seek capital to shore up operations. 

Forty percent of small- to medium-sized businesses (SMBs) say they are more worried about inflation than one year ago, and close to half of smaller companies report that they are likely to seek financing in the months ahead.

And as recently as this spring, 57% of Main Street SMBs said they have funding, “but only enough to operate for 60 days or fewer, underscoring a widespread need for new routes to funding their businesses in the near term.”