The number of initial jobless claims in the United States unexpectedly dropped to 206,000, which adds support for the Federal Reserve to hold steady in September.

Data released by the U.S. Department of Labor on Thursday showed that for the week ending August 15, the number of initial jobless claims in the U.S. decreased by 6,000 to 206,000, below economists' expectations of 210,000. Meanwhile, the previous weeks data was revised up to 212,000. This data further confirms that the U.S. labor market has remained quite resilient despite an unexpected weakening in the July nonfarm payroll data. Since the beginning of this year, the number of initial jobless claims has hovered at the lower end of the range between 189,000 and 230,000. In mid-July, this figure briefly dropped to 187,000, the lowest level since 1969. Although it has seen some recovery since then, it is still at a historically low level. The four-week moving average increased from 199,750 to 204,000. This rise in the indicator suggests that while the weekly data remains strong, the recent overall trend is gradually recovering from extremely low levels. The number of continuing unemployment claims (which measures the number of people receiving unemployment benefits) rose to 1.799 million, up from the previous value of 1.781 million and above the market expectation of 1.79 million. The insured unemployment rate remains unchanged at 1.2%. From a regional distribution perspective, seasonally unadjusted data shows that Michigan, New York, Texas, and South Carolina experienced the largest increases in initial claims. In New York, the increase has been attributed to layoffs in the professional, technological services, construction, and healthcare sectors. Meanwhile, Ohio, Iowa, Kentucky, Louisiana, and North Dakota saw the largest declines in claims. The current most notable feature of the U.S. labor market is the "no hiring, no firing" stalemate. On one hand, layoffs remain sparsecompanies are generally unwilling to reduce their existing workforce, a behavior closely linked to the deep memory of labor shortages after the pandemic. On the other hand, hiring intentions are also low: from January to July this year, employers added an average of only 61,000 jobs per month, which, while an improvement from 9,700 last year, is still far below the average of 166,000 jobs per month expected between 2023 and 2024. The unexpected decrease of 23,000 in nonfarm payrolls in July, combined with significant downward revisions of data from May and June, once raised concerns in the market regarding the health of the labor market. However, some economists believe that seasonal slowdowns typically occur in the summer job market, likely related to the seasonal adjustments associated with the academic calendar. The U.S. unemployment rate remains relatively low at 4.1%. However, this stability has a specific structural backgroundit is related to the resilience shown by the economy in the context of high energy prices, as well as the labor participation number decreasing due to tightening immigration policies and the ongoing retirement of the baby boomer generation, with more than 1.3 million people exiting the labor force in the past year. The moderate rise in continuing unemployment claims reflects a slowdown in the pace at which businesses are absorbing labor, but it has not yet constituted a signal of systemic weakening. Competition among first-time job seekers and the reemployment group remains fierce, while the lagging effects of high interest rates and the uncertainty surrounding trade policies continue to constrain companies' willingness to expand their workforce. Impact on the Federal Reserves September Decision: Expanded Space for Maintaining Current Policy The stability of the labor market, combined with recent signs of moderate inflationary pressure, is providing greater policy space for the Federal Reserve to maintain interest rates at the September meeting. Last month, the Federal Reserve kept the benchmark interest rate in the range of 3.50% to 3.75%, with three committee members dissenting, arguing for a 25 basis point rate hike. At the July FOMC meeting, the Federal Reserve maintained rates between 3.5% and 3.75% for the fifth consecutive time, but there were rare three dissenting votesthree district Federal Reserve presidents all advocated for a rate hike. The continued stability of the labor market offers new arguments for moderate officials who advocate for "waiting for more data before making a decision." However, the increase in continuing unemployment claims and the rise in the four-week moving average also serve as reminders to the market that the marginal changes in the labor market are relaxed rather than tightening. This state of "slow relaxation" may be the ideal path the Federal Reserve hopes to see in the process of bringing inflation back to the 2% targetavoiding triggering recession fears while relieving wage-price spiral pressures. Weak U.S. economic data has compressed the market's expectations of the probability of a Federal Reserve rate hike in September to about 33%. The unexpectedly weak nonfarm employment data for July did not show a simultaneous deterioration in jobless claims, creating a certain divergence between the two. Key Observations Moving Forward Although current data supports the Federal Reserve's decision to hold rates steady, the market should remain attentive to the August nonfarm employment report to further validate whether the labor market is undergoing a trend change. If the labor market maintains its current resilience and inflation remains moderate, the probability of the Federal Reserve keeping interest rates unchanged in September will further solidify; if systemic signals of weakening appear in the labor market, the Federal Reserve's policy considerations will gradually shift from solely anchoring inflation expectations to balancing inflation risk with employment risk.