US Economy Displays Resilience with Low Layoffs, Solid Second-Quarter Growth

• The number of Americans filing new applications for jobless benefits slipped last week, but re-employment opportunities for laid-off workers are becoming scarcer, a sign that the unemployment rate probably remained elevated in August.
• Though the labour market is slowing, it is doing so in an orderly fashion that is keeping the economic expansion on track. The economy grew faster than initially thought in the second quarter, powered by consumer spending, other data showed on Thursday. Corporate profits also rebounded last quarter, helping to further dispel fears of a recession.
• While the labour market slowdown positions the Federal Reserve to start cutting interest rates next month, the data argues against a 50-basis point reduction in borrowing costs.
• Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 231,000 for the week ended Aug. 24. Economists polled by Reuters had forecast 232,000 claims for the latest week. Claims have retreated from an 11-month high in late July as distortions from temporary motor vehicle plant shutdowns for new model retooling, and the impact of Hurricane Beryl faded.
• The Labour Department's Bureau of Labor Statistics last week estimated that employment growth was overstated by 68,000 jobs per month in the 12 months through March. But most economists viewed this so-called benchmark revision estimate as misleading.
• The benchmark estimate is based on the Quarterly Census of Employment and Wages data, derived from reports by employers to the state unemployment insurance programs. The data does not include undocumented immigrants, a group that economists believe contributed to strong job growth last year.
• A step-down in hiring because of tighter monetary policy is accounting for the loss of labour market momentum, rather than layoffs. It has attracted the attention of officials at the U.S. central bank, including Fed Chair Jerome Powell who last week said, "the time has come for policy to adjust."

(Source: Reuters)