The number of initial jobless claims in the United States unexpectedly came in lower than expected, but there is one "bad news"!

The latest data shows that last week's initial jobless claims in the United States fell more than expected, as the impact of weather and temporary closures of auto factories gradually subsided.

Data released by the U.S. Department of Labor on Thursday showed that for the week ending July 20, initial jobless claims dropped to 235,000, below the previous value of 245,000 and the expected 238,000, marking the ninth consecutive week above 220,000. Prior to this, except for the first three months of 2024, initial jobless claims were below 220,000 every week.

Although initial jobless claims have slightly increased in recent months, they remain at historically healthy levels. The average number of initial jobless claims over the past four weeks was 235,250, an increase of 250 from the previous week.

The number of continued jobless claims decreased for the second time in the past three weeks. For the week ending July 13, approximately 1.85 million Americans were receiving unemployment benefits, a decrease of about 9,000 from the previous week. However, this is the highest level since December 2021.

In recent months, the number of continued jobless claims has been rising, indicating that some Americans receiving unemployment benefits are finding it increasingly difficult to find work.

Institutions believe that the damage caused by Hurricane Beryl led to a surge in applications in Texas, and temporary closures of auto factories for equipment reorganization also drove this growth. However, layoffs remain at historically low levels.

The slowdown in the labor market is mainly due to the Federal Reserve's significant rate hikes in 2022 and 2023 cooling demand, leading to reduced hiring. The Fed has raised the benchmark interest rate 11 times since March 2022, trying to extinguish the 40-year high inflation sparked by the economic recovery efforts following the 2020 COVID-19 recession.

The Fed's aim is to curb an overheated labor market, slow down wage growth, as it believes wage growth will exacerbate inflation.

Currently, few analysts expect the Fed to cut rates at its meeting later this month, with most betting on the first rate cut in September. Following the GDP data release, financial markets expect the Fed to cut rates in September, followed by further cuts in November and December.

Strong consumer demand and a resilient labor market have helped avoid the economic recession predicted by many economists during the period of significant rate hikes. With inflation continuing to ease, the Fed's goal of reducing inflation without triggering an economic recession and massive layoffs seems within reach.

While the labor market remains at historically healthy levels, recent government data shows some signs of weakness: despite U.S. employers adding 206,000 jobs, the U.S. unemployment rate rose to 4.1% in June; the number of job openings in May increased slightly to 8.1 million, but the data for April was revised down to 7.9 million, the first time below 8 million since February 2021