Labor Market Tightens as US Weekly Jobless Claims Decline

The number of Americans filing new claims for unemployment benefits dropped by 11,000 to 239,000 last week, indicating continued tightness in the labor market despite slowing job growth. The resilience of the labor market, along with solid retail sales and increased homebuilding, has prompted economists to raise their growth estimates for the third quarter. However, this also raises the risk of the Federal Reserve raising interest rates again. The labor market is only slowing marginally, with job gains in July being the second-smallest since December 2020, and the unemployment rate remaining at historically low levels. Economists have reduced their forecasts for a recession this year and are considering the possibility of a "soft landing" guided by the Fed.