US jobless claims data allays fears over economic slowdown

Washington : The number of Americans filing fresh applications for unemployment benefits edged up only marginally for the week ended August 17, easing fears over a sharp slowdown in the US economy that had arisen due to the unexpected increase in the unemployment rate in July to its highest level recorded after the pandemic, at 4.3 per cent.

According to the latest figures released by the Labor Department, the list of US citizens seeking unemployment benefits went up by 4,000 to 232,000 for the week ended August 17.

All eyes are now on the US Fed Reserve as an interest rate cut of 0.25 per cent to 0.5 per cent is expected at its September 17-18 policy meeting since inflation has eased giving the central bank space to go for a soft money policy to spur economic growth.

The US central bank has kept its benchmark overnight interest rate in the current 5.25 per cent-5.5 per cent range for over a year and this is seen as hurting growth. Fed officials have said they are closely watching the labour market, which reflects the state of the economy.

Lower interest rates would result in lower the cost of credit for both consumers and corporates leading to higher levels of demand and investment, creating more jobs.

Federal Reserve Chair Jerome Powell’s policy speech on Friday is expected to give more cues about what lies ahead. He has in the past used his Jackson Hole speech to outline broad policy initiatives and to provide clues about the future of policy. The speech will be delivered at the Fed’s annual conclave of global central bankers in Jackson Hole, Wyoming. The conference is titled “Reassessing the Effectiveness and Transmission of Monetary Policy” and runs till Saturday.

Minutes from the July session of the monetary committee showed a "vast majority" of members in favour of a September cut in rates. Marketing analysts will be looking at hints about the amount and frequency of the reductions in the interest rate ahead.