First-time claims for US unemployment benefits unexpectedly fell in the week ended July 6th, according to a report released by the Labor Department on Thursday. The government revised the prior week's numbers of 221,000 claims up by 1,000 to 222,000 claims. For decades, economists assumed that low unemployment - such as the current jobless rate of 3.7% - meant that employers would have to raise pay to attract and keep workers, and in turn would then raise prices to cover higher wage costs. The claims data is entering a period of volatility as auto manufacturers temporarily shut down assembly plants for summer retooling. Many Fed officials historically would then support raising interest rates to forestall what was called a "wage-price spiral".
In his opening comments, Powell says that "uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the USA economic outlook".
Last month, however, the government reported that the economy created less than 75,000 jobs in May, the second time this year that job creation had come in weaker than expected. Manufacturing is struggling, the trade deficit is widening again, consumer spending is rising moderately and the housing sector remains mired in a soft patch. While the unemployment rate ticked up one-tenth of a percentage point to 3.7%, that was because more people entered the labor market, a sign of confidence in their employment prospects.
The number of Americans filing for state unemployment benefits decreased by 13,000 to 209,000 in the week ending Saturday from the previous week's revised level of 222,000, according to the department's report. The four-week moving average of the so-called continuing claims rose 5,750 to 1.69 million.