Jobless rate lowest since May

Applications for U.S. unemployment insurance fell for a fourth straight week to the lowest since May, suggesting demand for workers remains healthy despite an uncertain economic outlook.

Initial unemployment claims decreased by 6,000 to 222,000 in the week ended Sept. 3, lower than all estimates, Labor Department data showed Thursday.

The median estimate in a Bloomberg survey of economists called for 235,000 new applications.

The four-week moving average, which smooths out volatile week-to-week moves, fell to 233,000 – the lowest since early July.

Continuing claims for state benefits rose 36,000 to 1.47 million in the week ended Aug. 27.

After some choppiness over the summer , unemployment claims have been trending down in recent weeks, consistent with a tight labor market.

The U.S. added more than 300,000 jobs in August and openings remain near a record, indicating a strong appetite for hiring.

Job growth may slow, however, as the Federal Reserve continues on an aggressive path of interest-rate hikes to tame decades-high inflation.

Chair Jerome Powell said in a speech Thursday that the central bank hopes to slow economic growth through its policies, which will get the labor market back in balance.

“These timely data are signaling that the labor market is still strong, with layoffs declining, even as the Fed is tightening aggressively to rebalance supply and demand,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a note.

“Having faced severe labor shortages, businesses are likely reluctant to let go of workers, for now.”

Some companies, particularly in the housing and technology sectors, are already scaling back hiring efforts.

European Bank enacts huge hike

The European Central Bank on Thursday announced its largest increase in interest rates, as officials confront a nightmare scenario of soaring inflation coupled with an economy that appears to be stalling.

Meeting in Frankfurt, Germany, the bank’s governing council raised its main deposit rate by three-quarters of a percentage point, joining the Federal Reserve and other major central banks in a full-throated assault on rising prices, economists said.

ECB President Christine Lagarde said the supersized rate increase was needed because August’s 9.1% inflation rate was “far away” from the bank’s 2% goal.

Europe faces a multiyear fight to bring rising prices under control, she said, even as the bank’s forecast calls for output in the euro area to “stagnate” for the next six months.

“Nobody should expect inflation is going to return to 2% in the next three months,” she said. “We have a goal. We have a mission. We have incredibly high inflation numbers.

“The ECB is serious about returning inflation back to 2%.”

From wire reports